20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

£ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

OR

£ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report _________________

Commission file number

SCORPIO TANKERS INC.

(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)

Republic of The Marshall Islands

(Jurisdiction of incorporation or organization)

9, Boulevard Charles III Monaco 98000

(Address of principal executive offices)

Mr. Emanuele Lauro,

+377-9898-5716

9, Boulevard Charles III Monaco 98000

(Name, Telephone Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to section 12(b) of the Act.

	Name of each exchange
Title of each class	on which registered
Common Stock, par value of $0.01 per share	New York Stock Exchange

  Securities registered or to be registered pursuant to section 12(g) of the Act.

NONE

 (Title of class)

 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

  NONE

  (Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2011, there were 38,345,394 outstanding common shares with a par value $0.01 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

Yes £      No S 

If this report is an annual or transitional report, indicate by check mark if the registrant is not required to file reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. 

Yes £    No S 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

Yes S    No £ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes £    No £ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £ 

Accelerated filer  S

Non-accelerated filer £ 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: 

U.S. GAAP £  

International Financial Reporting Standards as issued by the International Accounting Standards Board S 

Other £ 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. 

Item 17 £    18 £ 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £    No S 

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors described from time to time in the reports we file with the SEC. We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to update or revise any forward-looking statements. These forward looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward looking statements. Please see our Risk Factors in Item 3 of this report for a more complete discussion of these and other risks and uncertainties.

In this annual report, “we”, “us”, “our”, and the “Company” all refer to Scorpio Tankers Inc.

(i)

TABLE OF CONTENTS

			Page
PART I.			1
	ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
	ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
	ITEM 3.	KEY INFORMATION	1
	ITEM 4.	INFORMATION ON THE COMPANY	21
	ITEM 4A.	UNRESOLVED STAFF COMMENTS	42
	ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	42
	ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	75
	ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	80
	ITEM 8.	FINANCIAL INFORMATION	86
	ITEM 9.	THE OFFER AND LISTING	87
	ITEM 10.	ADDITIONAL INFORMATION	87
	ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS	96
	ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	97
PART II			97
	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	97
	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF    PROCEEDS	97
	ITEM 15.	CONTROLS AND PROCEDURES	97
	ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	99
	ITEM 16B.	CODE OF ETHICS	99
	ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	99
	ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	99
	ITEM 16E.	PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	99
	ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	100
	ITEM 16G.	CORPORATE GOVERNANCE	100
	ITEM 16H.	MINE SAFETY DISCLOSURE	100
PART III			101
	ITEM 17.	FINANCIAL STATEMENTS	101
	ITEM 18.	FINANCIAL STATEMENTS	101
	ITEM 19.	EXHIBITS	101

(ii)

PART I.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following table sets forth our selected consolidated financial data and other operating data. The selected financial data in the tables as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 are derived from our audited consolidated financial statements, which have been presented herein, and which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). This data should be read in conjunction with the consolidated financial statements and the notes thereto included in “ITEM 18. Financial Statements” in this annual report and “ITEM 5. Operating and Financial Review and Prospects.”

The selected financial data as of December 31, 2009, 2008 and 2007 and for the periods ended December 31, 2008 and 2007 are derived from our audited consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB and are not presented herein.

We began our operations in October 2009, when Liberty Holding Company Ltd., or Liberty, then a wholly-owned subsidiary of Simon Financial Limited, or Simon, a company owned and controlled by the Lolli-Ghetti family, of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, is a member, transferred to us three vessel owning and operating subsidiary companies. Prior to October 1, 2009, our historical consolidated financial statements were prepared on a carve-out basis from the financial statements of Liberty. These carve-out financial statements include all assets, liabilities and results of operations of the three vessel-owning subsidiaries owned by us, formerly subsidiaries of Liberty, for the periods presented. For the periods presented, certain of the expenses incurred by these subsidiaries for commercial, technical and administrative management services were under management agreements with other Scorpio Group entities owned and controlled by the Lolli-Ghetti family, consisting of: (i) Scorpio Ship Management S.A.M., or SSM; and Scorpio Commercial Management S.A.M., or SCM; which provide us and third parties with technical and commercial management services, respectively; (ii) Liberty, which provided us with administrative services until March 13, 2012 when the administrative services agreement was assigned to Scorpio Services Holding Limited, or SSH, a company owned by the Lolli-Ghetti family; and (iii) other affiliated entities. Since agreements with related parties are by definition not at arms length, the expenses incurred under these agreements may have been different than the historical costs incurred if the subsidiaries had operated as unaffiliated entities during prior periods. Our estimates of any differences between historical expenses and the expenses that may have been incurred had the subsidiaries been stand-alone entities have been disclosed in the notes to our historical consolidated financial statements.

	For the year ended December 31,
	2011			2010			2009			2008			2007
Consolidated Statement of Profit or Loss Data
Revenue:
Vessel revenue	$	82,109,691		$	38,797,913		$	27,619,041		$	39,274,196		$	30,317,138
Operating expenses:
Vessel operating costs		(31,369,646	)		(18,440,492	)		(8,562,118	)		(8,623,318	)		(7,600,509	)
Voyage expenses		(6,881,019	)		(2,542,298	)		—			—			—
Charter hire		(22,750,257	)		(275,532	)		(3,072,916	)		(6,722,334	)		—
Impairment (1)		(66,610,544	)		—			(4,511,877	)		—			—
Depreciation		(18,460,117	)		(10,178,908	)		(6,834,742	)		(6,984,444	)		(6,482,484	)
General and administrative expenses		(11,636,713	)		(6,200,094	)		(416,908	)		(600,361	)		(590,772	)
Total operating expenses		(157,708,296	)		(37,637,324	)		(23,398,561	)		(22,930,457	)		(14,673,765	)
Operating income		(75,598,605	)		1,160,589			4,220,480			16,343,739			15,643,373
Other income and expense:
Financial expenses		(7,060,027	)		(3,230,895	)		(699,115	)		(1,710,907	)		(1,953,344	)
Realized loss on derivative financial instruments		—			(279,560	)		(808,085	)		(405,691	)		(523,694	)
Unrealized gain on derivative financial instruments		—			—			956,120			(2,057,957	)		(1,245,472	)
Financial income		51,008			36,534			4,929			35,492			142,233
Other expense, net		(118,968	)		(508,766	)		(256,292	)		(18,752	)		(9,304	)
Total other income and expense		(7,127,987	)		(3,982,687	)		(802,443	)		(4,157,815	)		(3,589,581	)
Net (loss)/income	$	(82,726,592	)	$	(2,822,098	)	$	3,418,037		$	12,185,924		$	12,053,792
(Loss)/earnings per common share: (2)
Basic and diluted (loss)/earnings per share	$	(2.88	)	$	(0.18	)	$	0.61		$	2.18		$	2.16
Basic and diluted weighted average shares outstanding		28,704,876			15,600,813			5,589,147			5,589,147			5,589,147

1

	As of December 31,
	2011		2010		2009		2008		2007
Balance Sheet Data
Cash and cash equivalents	$	36,833,090	$	68,186,902	$	444,496	$	3,607,635	$	1,153,743
Vessels and drydock		322,457,755		333,425,386		99,594,267		109,260,102		116,244,546
Vessels under construction		60,332,870		—		—		—		—
Total assets		448,229,772		412,268,440		104,423,386		117,111,827		122,555,022
Current and non-current bank loans		145,567,511		143,188,402		36,200,000		43,400,000		47,000,000
Shareholder payable (3)		—		—		—		22,028,323		19,433,097
Related party payable (3)		—		—				27,406,408		27,406,408
Shareholders' equity		286,853,227		264,783,182		61,328,542		20,299,166		6,897,242

2

	For the year
	Ended December 31,
	2011			2010			2009			2008			2007
Condensed Cash Flows
Net cash inflow/(outflow):
Operating activities	$	(12,451,163	)	$	4,906,478		$	9,305,851		$	24,837,892		$	5,830,733
Investing activities		(122,573,437	)		(245,594,809	)		—			—			—
Financing activities		103,670,788			308,430,737			(12,468,990	)		(22,384,000	)		(10,693,500	)

(1)	In the years ended December 31, 2011 and December 31, 2009, we recorded an impairment charge of $66.6 million for all 12 of our vessels and $4.5 million for two of our vessels, respectively.  See Item 5. “Operating and Financial Review and Prospects”.
(2)	Basic earnings per share is calculated by dividing the net income attributable to equity holders of the parent  by the weighted average number of common shares outstanding assuming, for the period prior to October 1, 2009, when our historical consolidated financial statements were prepared on a carve-out basis, that the reorganization described in Note 1 "Basis of Accounting" in the consolidated financial statements as of and for the year ended December 31, 2011 was effective during the period. In addition, the stock split which occurred on March 17, 2010 has been given retroactive effect for all periods presented herein. Diluted earnings per share are calculated by adjusting the net income attributable to equity holders of the parent and the weighted average number of common shares used for calculating basic earnings per share for the effects of all potentially dilutive shares. Such potentially dilutive common shares are excluded when the effect would be to increase earnings per share or reduce a loss per share.  There were no such dilutive or antidilutive instruments in the current year.
(3)	On November 18, 2009, the shareholder payable and the related party payable balances, as of that date, were converted to equity as a capital contribution.

The following table sets forth our other operating data. This data should be read in conjunction with “ITEM 5. Operating and Financial Review and Prospects.”

	For the year ended December 31,
	2011		2010		2009		2008		2007
Average Daily Results
Time charter equivalent per day(1)	$	12,898	$	16,213	$	23,423	$	29,889	$	27,687
Vessel operating costs per day(2)		7,581		8,166		7,819		7,875		6,941
Aframax/LR2
TCE per revenue day - pool		14,849		12,460		—		—		—
TCE per revenue day - time charters		15,457		—		—		—		—
Vessel operating costs per day(2)		6,960		8,293		—		—		—
Panamax/LR1
TCE per revenue day - pool		12,876		15,213		21,425		36,049		29,848
TCE per revenue day - spot		—		2,839		—		—		—
TCE per revenue day - time charters		23,962		22,729		24,825		24,992		24,382
Vessel operating costs per day(2)		7,891		8,189		7,819		7,875		6,941
Handymax
TCE per revenue day - pool		11,343		9,965		—		—		—
TCE per revenue day - spot		—		8,077		—		—		—
Vessel operating costs per day(2)		7,619		8,107		—		—		—
MR
TCE per revenue day - spot		12,092		—		—		—		—
Vessel operating costs per day(2)		6,748		—		—		—		—
Fleet data
Average number of owned vessels		11.29		6.19		3.00		3.00		3.00
Average number of time chartered-in vessels		4.95		0.06		0.33		0.59		—
Drydock
Expenditures for drydock	$	2,624,094	$	974,430	$	1,680,784	$	—	$	—

(1)	Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per revenue day. Vessels in the pool and on time charter do not have voyage expenses; therefore, the revenue for pool vessels and time charter vessels is the same as their TCE revenue. Please see “Important financial and operational terms and concepts” section below for a discussion of TCE revenue, revenue days and voyage expenses.
(2)	Vessel operating costs per day represent, Vessel operating costs, as such term is defined in the “Important financial and operational terms and concepts” section below, divided by the number of days the vessel is owned during the period.
(3)	For a definition of items listed under “Fleet Data,” please see the section of this annual report entitled ITEM 5. “Operating and Financial Review and Prospects”.

3

B. Capitalization and indebtedness

Not applicable.

C. Reasons for the offer and use of proceeds

Not applicable.

D. Risk Factors

The following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common stock. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or cash available for dividends or the trading price of our common stock.

RISKS RELATED TO OUR INDUSTRY

If the tanker industry, which historically has been cyclical, continues to be depressed in the future, our earnings and available cash flow may be adversely affected.

The tanker industry is both cyclical and volatile in terms of charter rates and profitability. A worsening of the current global economic conditions may adversely affect our ability to charter or recharter our vessels or to sell them on the expiration or termination of their charters and the rates payable in respect of our vessels currently operating in tanker pools, or any renewal or replacement charters that we enter into may not be sufficient to allow us to operate our vessels profitably. Fluctuations in charter rates and tanker values result from changes in the supply and demand for tanker capacity and changes in the supply and demand for oil and oil products. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.

4

The factors that influence demand for tanker capacity include:

· supply and demand for oil and oil products;

· regional availability of refining capacity and inventories;

· global and regional economic and political conditions, including armed conflicts, terrorist activities, and strikes;

· the distance oil and oil products are to be moved by sea;

· changes in seaborne and other transportation patterns;

· environmental and other legal and regulatory developments;

· weather and natural disasters;

· competition from alternative sources of energy; and

· international sanctions, embargoes, import and export restrictions, nationalizations and wars.

The factors that influence the supply of tanker capacity include:

· the number of newbuilding deliveries;

· the scrapping rate of older vessels;

· conversion of tankers to other uses;

· the number of vessels that are out of service;

· environmental concerns and regulations.; and

· port or canal congestion.

We are dependent on spot-oriented pools and spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.

All of our vessels are employed in either the spot market or in the Scorpio Group Pools, which are spot market-oriented tanker pools, exposing us to fluctuations in spot market charter rates. The spot charter market may fluctuate significantly based upon tanker and oil supply and demand. The successful operation of our vessels in the competitive spot charter market, including within the Scorpio Group Pools, depends on, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods when spot rates have declined below the operating cost of vessels. If future spot charter rates decline, then we may be unable to operate our vessels trading in the spot market profitably, meet our obligations, including payments on indebtedness, or to pay dividends in the future. Furthermore, as charter rates for spot charters are fixed for a single voyage which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.

Our ability to negotiate new charters on our vessels, the charter rates payable under any charters and vessel values will depend upon, among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for the seaborne transportation of energy resources.

5

An over-supply of tanker capacity may lead to reductions in charter rates, vessel values, and profitability.

The market supply of tankers is affected by a number of factors such as demand for energy resources, oil, and petroleum products, as well as strong overall economic growth in parts of the world economy including Asia. If the capacity of new ships delivered exceeds the capacity of tankers being scrapped and lost, tanker capacity will increase. In addition, according to Drewry Shipping Consultants Ltd., or Drewry, as of the end of February 2012, the newbuilding order book, which extends to 2015 equaled approximately 14.8% of the existing world tanker fleet and the order book may increase further in proportion to the existing fleet. If the supply of tanker capacity increases and if the demand for tanker capacity decreases or does not increase correspondingly, charter rates could materially decline. A reduction in charter rates and the value of our vessels may have a material adverse effect on our results of operations and available cash.

Acts of piracy on ocean-going vessels could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden. Although sea piracy worldwide decreased slightly in 2011 for the first time in five years, throughout 2008, 2009 and 2010, the frequency of piracy incidents increased significantly, particularly in the Gulf of Aden off the coast of Somalia. If these piracy attacks result in regions in which our vessels are deployed being characterized by insurers as "war risk" zones by insurers or Joint War Committee "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which may be incurred to the extent we employ onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations, cash flows and financial condition and may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.

The current state of the global financial markets and current economic conditions may adversely impact our ability to obtain financing on acceptable terms and otherwise negatively impact our business.

Global financial markets and economic conditions have been, and continue to be, volatile. Recently, operating businesses in the global economy have faced tightening credit, weakening demand for goods and services, deteriorating international liquidity conditions, and declining markets. There has been a general decline in the willingness by banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been negatively affected by this decline.

Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Due to these factors, we cannot be certain that financing will be available if needed and to the extent required, on acceptable terms. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise.

If economic conditions throughout the world do not improve, it will impede our operations.

Negative trends in the global economy that emerged in 2008 continue to adversely affect global economic conditions. In addition, the world economy is currently facing a number of new challenges, including uncertainty related to the continuing discussions in the United States regarding the federal debt ceiling and recent turmoil and hostilities in the Middle East, North Africa and other geographic areas and countries. There has historically been a strong link between the development of the world economy and demand for energy, including oil and gas. An extended period of deterioration in the outlook for the world economy could reduce the overall demand for oil and gas and for our services. Such changes could adversely affect our results of operations and cash flows.

6

The United States, the European Union and other parts of the world have recently been or are currently in a recession and continue to exhibit weak economic trends. The credit markets in the United States and Europe have experienced significant contraction, de-leveraging and reduced liquidity, and the U.S. federal government and state governments and European authorities have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The Securities and Exchange Commission, or the SEC, and other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws. Global financial markets and economic conditions have been, and continue to be, severely disrupted and volatile. Credit markets and the debt and equity capital markets have been exceedingly distressed.

We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations and may cause the price of our common stock to decline.

Changes in fuel, or bunkers, prices may adversely affect profits.

Fuel, or bunkers, is typically the largest expense in our shipping operations for our vessels and changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability.

We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our business, results of operations, cash flows and financial condition, and our available cash.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, the U.S. Clean Air Act, U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002, and regulations of the International Maritime Organization, or the IMO, including the International Convention for the Prevention of Pollution from Ships of 1975, the International Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, and the International Ship and Port Facility Security Code. Compliance with such laws and regulations, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. The 2010 Deepwater Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes or changes to existing laws that may affect our operations or require us to incur additional expenses to comply with such regulatory initiatives, statutes or laws.

These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition and our available cash. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-nautical mile exclusive economic zone around the United States (unless the spill results solely from the act or omission of a third party, an act of God or an act of war). An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under other international and U.S. federal, state and local laws, as well as third-party damages, including punitive damages, and could harm our reputation with current or potential charterers of our tankers. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and available cash.

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If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the IMO’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code, promulgated by the IMO under the International Convention for the Safety of Life at Sea of 1974, or SOLAS. The ISM Code requires the party with operational control of a vessel to develop and maintain an extensive “Safety Management System” that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply with the ISM Code, we may be subject to increased liability, may invalidate existing insurance or decrease available insurance coverage for our affected vessels and such failure may result in a denial of access to, or detention in, certain ports.

Adverse market conditions could cause us to breach covenants in our credit facilities and adversely affect our operating results.

The market values of tankers have generally experienced high volatility. The market prices for tankers declined significantly from historically high levels reached in early 2008 and remain at relatively low levels. You should expect the market value of our vessels to fluctuate depending on general economic and market conditions affecting the shipping industry and prevailing charterhire rates, competition from other shipping companies and other modes of transportation, types, sizes and ages of vessels, competition from other tanker companies, applicable governmental regulations and the cost of newbuildings. If the market value of our fleet declines, we may not be able to obtain additional financing or incur debt on terms that are acceptable to us, or at all. We believe that the current aggregate market value of our vessels will be in excess of loan to value amounts required under our credit facilities, which requires that the fair market value of the vessels pledged as collateral never be less than 150% of the aggregate principal amount outstanding for the 2010 Revolving Credit Facility and 2011 Credit Facility, 140% of the aggregate principal amount outstanding for the STI Spirit Credit Facility and 140% (130% if the vessel is subject to acceptable long term employment) of the aggregate principal amount outstanding plus a pro rata amount of any allocable swap exposure for the Newbuilding Credit Facility. In addition, each of our 2010 Revolving Credit Facility, 2011 Credit Facility and STI Spirit Credit Facility require us to maintain a ratio of EBITDA to interest expense of no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 through the fourth quarter of 2012, at which time it will increase to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013, and 2.00 to 1.00 at all times thereafter. Our Newbuilding Credit Facility requires us to maintain a ratio of EBITDA to interest expense of not less than 2.00 to 1.00 through the fourth quarter of 2012 and 2.50 to 1.00 at all times thereafter. Such ratio in all our credit facilities shall be calculated quarterly on a trailing four quarter basis. A decrease in vessel values or a failure to meet these ratios could cause us to breach certain covenants in our existing credit facilities and future financing agreements that we may enter into from time to time. If we breach such covenants and are unable to remedy the relevant breach or obtain a waiver, our lenders could accelerate our debt and foreclose on vessels in our fleet. If we sell any vessel at any time when vessel values have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings. For the year ended December 31, 2011, we evaluated the recoverable amount of our vessels, and we recognized a total impairment loss of $66.6 million for all of our owned vessels. In February 2012, we entered into agreements to sell the STI Conqueror for $21.0 million and the STI Matador and STI Gladiator for $16.2 million each. As a result of these sales, we recognized an additional loss of $4.0 million. See “—Risks related to our indebtedness” and “ITEM 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources, Long-Term Debt Obligations and Credit Arrangements” for a more comprehensive discussion of our current credit facilities and the related risks.

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If our vessels suffer damage due to the inherent operational risks of the tanker industry, we may experience unexpected drydocking costs and delays or total loss of our vessels, which may adversely affect our business and financial condition.

The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather, and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. Changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These hazards may result in death or injury to persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships, and market disruptions, delay or rerouting, which may also subject us to litigation. In addition, the operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and the associated costs could exceed the insurance coverage available to us. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tankers.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may adversely affect our business and financial condition. Further, the total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs, or loss which could negatively impact our business, financial condition, results of operations and available cash.

We operate our vessels worldwide and as a result, our vessels are exposed to international risks which may reduce revenue or increase expenses.

The international shipping industry is an inherently risky business involving global operations. Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather, and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. In addition, changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These sorts of events could interfere with shipping routes and result in market disruptions which may reduce our revenue or increase our expenses.

International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination and trans-shipment points. Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

Political instability, terrorist or other attacks, war or international hostilities can affect the tanker industry, which may adversely affect our business.

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We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and available cash may be adversely affected by the effects of political instability, terrorist or other attacks, war or international hostilities. Continuing conflicts and recent developments in the Middle East, including Egypt, and North Africa, including Libya, and the presence of the United States and other armed forces in Iraq and Afghanistan may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further world economic instability and uncertainty in global financial markets. As a result of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. Future terrorist attacks could result in increased volatility of the financial markets and negatively impact the U.S. and global economy. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.

In the past, political instability has also resulted in attacks on vessels, such as the attack on the M/T Limburg, a very large crude carrier not related to us, in October 2002, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our business, financial condition, results of operations and available cash.

If our vessels call on ports located in countries that are subject to sanctions and embargos imposed by the U.S. or other governments that could adversely affect our reputation and the market for our common stock.

Although no vessels operated by us have called on ports located in countries subject to sanctions and embargoes imposed by the U.S. government and countries identified by the U.S. government as state sponsors of terrorism, such as Cuba, Iran, Sudan, and Syria, in the future, our vessels may call on ports in these countries from time to time on charterers’ instructions. Sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or “CISADA”, which expanded the scope of the former Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to non-U.S. companies, such as our company, and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products. Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest, in our company. Additionally, some investors may decide to divest their interest, or not to invest, in our company simply because we do business with companies that do business in sanctioned countries. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. Investor perception of the value of our common stock may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

We expect that our vessels will call in ports where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Maritime claimants could arrest our vessels, which would have a negative effect on our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our business or require us to pay large sums of money to have the arrest lifted, which would have a negative effect on our cash flows.

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In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our ships.

Governments could requisition our vessels during a period of war or emergency, which may negatively impact our business, financial condition, results of operations and available cash.

A government could requisition one or more of our vessels for title or hire. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels may negatively impact our business, financial condition, results of operations and available cash.

Technological innovation could reduce our charterhire income and the value of our vessels.

The charterhire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new tankers are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charterhire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our available cash could be adversely affected.

If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

We, indirectly through SSM, employ masters, officers and crews to man our vessels. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

RISKS RELATED TO OUR BUSINESS

We have a limited history of operations on which investors may assess our performance.

We were formed on July 1, 2009, and our initial three vessel-owning subsidiaries were transferred to us on October 1, 2009. Since our initial public offering in April 2010, we have acquired nine additional vessels, sold three vessels and chartered-in 13 vessels. As such, we have been operating the majority of our vessels for less than two years. We have a limited performance record and operating history, and, therefore, limited historical financial information, upon which you can evaluate our operating performance, ability to implement and achieve our business strategy or ability to pay dividends in the future. We cannot assure you that we will be successful in implementing our business strategy. As a young company, we will face certain operational challenges not faced by companies with a longer operating history.

Obligations associated with being a public company require significant company resources and management attention.

In April 2010, we became subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal controls over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will need to dedicate a significant amount of time and resources to ensure compliance with these regulatory requirements.

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We will continue to evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow us to satisfy our obligations as a public company on a timely and reliable basis. In addition, compliance with reporting and other requirements applicable to public companies will create additional costs for us and will require the time and attention of management. Our limited management resources may exacerbate the difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. Our incremental general and administrative expenses as a publicly traded corporation will include costs associated with annual reports to shareholders, tax returns, investor relations, registrar and transfer agent’s fees, incremental director and officer liability insurance costs and director compensation. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management's attention to these matters will have on our business.

We may have difficulty managing our planned growth properly.

One of our principal strategies is to continue to grow by expanding our operations and adding to our fleet. Our future growth will primarily depend upon a number of factors, some of which may not be within our control. These factors include our ability to:

· identify suitable tankers and/or shipping companies for acquisitions at attractive prices;

· obtain required financing for our existing and new operations;

· identify businesses engaged in managing, operating or owning tankers for acquisitions or joint ventures;

· integrate any acquired tankers or businesses successfully with our existing operations, including obtaining any approvals and qualifications necessary to operate vessels that we acquire;

· hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet;

· identify additional new markets;

· enhance our customer base; and

· improve our operating, financial and accounting systems and controls.

Our failure to effectively identify, purchase, develop and integrate any tankers or businesses could adversely affect our business, financial condition and results of operations. The number of employees that perform services for us and our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and we may not be able to effectively hire more employees or adequately improve those systems. Finally, acquisitions may require additional equity issuances or debt issuances (with amortization payments), both of which could lower available cash. If we are unable to execute the points noted above, our financial condition may be adversely affected.

Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significant additional responsibilities on our management and staff, and the management and staff of our commercial and technical managers, and may necessitate that we, and they, increase the number of personnel. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future growth.

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In the event Hyundai Mipo Dockyard Ltd. (“Hyundai”) does not perform under its agreements with us for the construction of our Newbuilding Vessels and we are unable to enforce certain refund guarantees, we may lose all or part of our investment, which would have a material adverse effect on our results of operations, financial condition and cash flows.

Our seven Newbuilding Vessels are currently under construction with Hyundai. As of March 23, 2012, we have made total yard payments in the amount of $72.7 million and we have remaining yard installments in the amount of $186.6 million before we take possession of these vessels.

In the event Hyundai does not perform under the contracts and we are unable to enforce certain refund guarantees with third party banks for any reason, we may lose all or part of our investment, which would have a material adverse effect on our results of operations, financial condition and cash flows.

Delays in deliveries of additional vessels, our decision to cancel an order for purchase of a vessel or our inability to otherwise complete the acquisitions of additional vessels for our fleet, could harm our operating results.

We currently have seven Newbuilding Vessels under construction at Hyundai which are scheduled to be delivered to the Company between July 2012 and April 2013. The delivery of such vessels or vessels that we may acquire in the future could be delayed, not completed or cancelled, which would delay or eliminate our expected receipt of revenues from the employment of such vessels. In addition, the yard or a seller could fail to deliver vessels to us as agreed, or we could cancel a purchase contract because such yard or seller has not met its obligations.

If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we become responsible for substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition and results of operations could be adversely affected.

If we purchase and operate secondhand vessels, we will be exposed to increased operating costs which could adversely affect our earnings and, as our fleet ages, the risks associated with older vessels could adversely affect our ability to obtain profitable charters.

Our current business strategy includes additional growth through the acquisition of new and secondhand vessels. While we typically inspect secondhand vessels prior to purchase, this does not provide us with the same knowledge about their condition that we would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties from the builders for the secondhand vessels that we acquire.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

An increase in operating costs would decrease earnings and available cash.

Under time charter agreements, the charterer is responsible for voyage costs and the owner is responsible for the vessel operating costs. We currently have no vessels on time charter agreements. Under the tanker pool agreements, the pool is responsible for the voyage expenses and we are responsible for vessel costs. We currently have nine of our owned vessels operating in pools. We are responsible for both voyage expenses and vessel operating costs for vessels operating in the spot market. We currently have two of our owned vessels operating in the spot market. Our vessel operating costs include the costs of crew, fuel (for spot chartered vessels), provisions, deck and engine stores, insurance and maintenance and repairs, which depend on a variety of factors, many of which are beyond our control. Some of these costs, primarily relating to insurance and enhanced security measures implemented after September 11, 2001, have been increasing. If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydocking repairs are unpredictable and can be substantial. Increases in any of these expenses would decrease earnings and available cash.

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Declines in charter rates and other market deterioration could cause us to incur impairment charges.

We evaluate the carrying amounts of our vessels to determine if events have occurred that would require an impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows related to the vessels is complex and requires us to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile.

We evaluate the recoverable amount as the higher of fair value less costs to sell and value in use. If the recoverable amount is less than the carrying amount of the vessel, the vessel is deemed impaired. The carrying values of our vessels may not represent their fair market value at any point in time because the new market prices of secondhand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. For the year ended December 31, 2009, charter rates in the oil and petroleum products charter market declined significantly and Panamax vessel values also declined, both as a result of a slowdown in the availability of global credit and the significant deterioration in charter rates. Due to these indicators of potential impairment, in the year ended December 31, 2009, we evaluated the recoverable amount of our vessels, and we recognized a total impairment loss of $4.5 million for two of our vessels. In the year ended 2010, we did not record an impairment charge. For the year ended December 31, 2011, charter rates in the oil and petroleum products charter market further declined along with second hand vessel values. Due to these indicators of potential impairment, in the year ended December 31, 2011, we evaluated the recoverable amount of our vessels, and we recognized a total impairment loss of $66.6 million for all of our owned vessels. We cannot assure you that there will be not be further impairments in future years. Any additional impairment charges incurred as a result of further declines in charter rates could negatively affect our business, financial condition, operating results or the trading price of our common shares.

If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker market, which would negatively affect our financial condition and our ability to expand our business.

The operation of tanker vessels and transportation of crude and petroleum products is extremely competitive, in an industry that is capital intensive and highly fragmented. The recent global financial crisis may reduce the demand for transportation of oil and oil products which could lead to increased competition. Competition arises primarily from other tanker owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater resources than we do. Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker and its operators to the charterers. We will have to compete with other tanker owners, including major oil companies as well as independent tanker companies.

Our market share may decrease in the future. We may not be able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, at the end of a vessel’s useful life our revenue will decline, which would adversely affect our business, results of operations, financial condition, and available cash.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives, which we expect to occur between 2026 to 2038, depending on the vessel. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations, financial condition, and available cash per share would be adversely affected. Any funds set aside for vessel replacement will reduce available cash.

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Our ability to obtain additional financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers.

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operation and our ability to implement our business strategy.

United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences to United States shareholders.

A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

Based on our current and proposed method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, our income from our time and voyage chartering activities should not constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute assets that produce or are held for the production of “passive income.”

There is substantial legal authority supporting this position, consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority that characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations change.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders would face adverse United States federal income tax consequences and incur certain information reporting obligations. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or the Code (which election could itself have adverse consequences for such shareholders), such shareholders would be subject to United States federal income tax at the then prevailing rates on ordinary income plus interest, in respect of excess distributions and upon any gain from the disposition of their common shares, as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of the common shares. See “Taxation—Passive Foreign Investment Company Status and Significant Tax Consequences” for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.

We may have to pay tax on United States source shipping income, which would reduce our earnings.

Under the Code, 50% of the gross shipping income of a corporation that owns or charters vessels, as we and our subsidiaries do, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for deductions, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the regulations promulgated thereunder by the United States Department of the Treasury.

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We and our subsidiaries intend to take the position that we qualify for this statutory tax exemption for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and thereby become subject to United States federal income tax on our United States source shipping income. For example, we may no longer qualify for exemption under Section 883 of the Code for a particular taxable year if shareholders with a five percent or greater interest in our common shares, or “5% Shareholders,” owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year, and there does not exist sufficient 5% Shareholders that are qualified shareholders for purposes of Section 883 of the Code to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than half the number of days during such taxable year or we are unable to satisfy certain substantiation requirements with regard to our 5% Shareholders. Due to the factual nature of the issues involved, there can be no assurances on the tax-exempt status of us or any of our subsidiaries.

If we or our subsidiaries were not entitled to exemption under Section 883 of the Code for any taxable year, we or our subsidiaries could be subject for such year to an effective 2% United States federal income tax on the shipping income we or they derive during such year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would decrease our earnings available for distribution to our shareholders.

Any dividends paid by us may not qualify for preferential rates of United States federal income taxation in the hands of United States non-corporate shareholders.

We expect that any dividends paid on our common shares to a United States shareholder who is an individual, trust or estate will generally be treated as “qualified dividend income” that is taxable at preferential United States federal income tax rates (through 2012). Our dividends will be so treated provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the New York Stock Exchange, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we believe we have not been, are not and do not anticipate being in the future); (3) the recipient of the dividend has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) the recipient of the dividend is not under an obligation to make related payments with respect to positions in substantially similar or related property.

There is no assurance that any dividends paid on our common shares will be eligible for these preferential rates in the hands of a United States non-corporate shareholder. For example, under current law, the preferential rate for qualified dividend income is scheduled to expire on December 31, 2012. If the preferential rate for such dividends is not extended, then any dividends paid by us after December 31, 2012 will be treated as ordinary income. In addition, legislation has been previously introduced in the United States Congress which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of enactment. Finally, our dividends would not be “qualified dividend income” if we are treated as a PFIC for the taxable year in which we pay the dividend or the immediately preceding taxable year.

We will be required to make additional capital expenditures to expand the number of vessels in our fleet and to maintain all our vessels, which will be dependent on additional financing.

Our business strategy is based in part upon the expansion of our fleet through the purchase of additional vessels. If we are unable to fulfill our obligations under any memorandum of agreement for future vessel acquisitions, the sellers of such vessels may be permitted to terminate such contracts and we may forfeit all or a portion of the down payments we already made under such contracts, and we may be sued for any outstanding balance.

In addition, we will incur significant maintenance costs for our existing and any newly-acquired vessels. A newbuilding vessel must be drydocked within five years of its delivery from a shipyard, and vessels are typically drydocked every 30 months thereafter, not including any unexpected repairs. We estimate the cost to drydock a vessel to be between $500,000 and $1,000,000, depending on the size and condition of the vessel and the location of drydocking.

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We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States.

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of The Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of The Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

It may be difficult to serve process on or enforce a United States judgment against us, our officers and our directors because we are a foreign corporation.

We are a corporation formed in the Republic of The Marshall Islands, and some of our directors and officers and certain of the experts named in this offering are located outside the United States. In addition, a substantial portion of our assets and the assets of our directors, officers and experts are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in U.S. courts against us or any of these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is substantial doubt that the courts of the Republic of The Marshall Islands or of the non-U.S. jurisdictions in which our offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws.

RISKS RELATED TO OUR RELATIONSHIP WITH SCORPIO GROUP AND ITS AFFILIATES

We are dependent on our managers and their ability to hire and retain key personnel, and there may be conflicts of interest between us and our managers that may not be resolved in our favor.

Our success depends to a significant extent upon the abilities and efforts of our technical manager, SSM, our commercial manager, SCM, and our management team. Our success will depend upon our and our managers’ ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition.

Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not maintain “key man” life insurance on any of our officers.

Our technical and commercial managers are affiliates of Scorpio Group, which is owned and controlled by the Lolli-Ghetti family, of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, is a member. Conflicts of interest may arise between us, on the one hand, and our commercial and technical managers, on the other hand. As a result of these conflicts, our commercial and technical managers, who have limited contractual duties, may favor their own or their owner’s interests over our interests. These conflicts may have unfavorable results for us.

Our founder, Chairman and Chief Executive Officer has affiliations with our commercial and technical managers which may create conflicts of interest.

Emanuele Lauro, our founder, Chairman and Chief Executive Officer, is a member of the Lolli-Ghetti family which owns and controls our commercial and technical managers. These responsibilities and relationships could create conflicts of interest between us, on the one hand, and our commercial and technical managers, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus vessels managed by other companies affiliated with our commercial or technical managers. Our commercial and technical managers may give preferential treatment to vessels that are time chartered-in by related parties because our founder, Chairman and Chief Executive Officer and members of his family may receive greater economic benefits. In particular, as of March 23, 2012, our commercial and technical managers provide commercial and technical management services to approximately 44 and 7 vessels respectively, other than the vessels in our fleet. In addition, our commercial manager provides services to eight vessels that are operated by entities affiliated with Mr. Lauro, and such entities may acquire additional vessels that will compete with our vessels in the future. Such conflicts may have an adverse effect on our results of operations.

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Our Chief Executive Officer and President do not devote all of their time to our business, which may hinder our ability to operate successfully.

Messrs. Lauro and Bugbee, our Chief Executive Officer and President, respectively, participate in business activities not associated with the Company. As a result, Messrs. Lauro and Bugbee may devote less time to the Company than if they were not engaged in other business activities and may owe fiduciary duties to the shareholders of both the Company as well as shareholders of other companies which they may be affiliated, including other Scorpio Group companies. This may create conflicts of interest in matters involving or affecting the Company and its customers and it is not certain that any of these conflicts of interest will be resolved in our favor. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our commercial and technical managers are each privately held companies and there is little or no publicly available information about them.

SCM is our commercial manager and SSM is our technical manager. SCM’s and SSM’s ability to render management services will depend in part on their own financial strength. Circumstances beyond our control could impair our commercial manager’s or technical manager’s financial strength, and because each is a privately held company, information about the financial strength of our commercial manager and technical manager is not available. As a result, we and our shareholders might have little advance warning of financial or other problems affecting our commercial manager or technical manager even though their financial or other problems could have a material adverse effect on us.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.

We have entered into, and may enter in the future, various contracts, including charter agreements and credit facilities. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various expenses. For example, the combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in a significant reduction in the ability of our charterers to make charter payments to us. In addition, in depressed market conditions, our charterers and customers may no longer need a vessel that is currently under charter or contract or may be able to obtain a comparable vessel at lower rates. As a result, charterers and customers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The failure of our charterers to meet their obligations under our charter agreements, on which we depend for our revenues, could cause us to suffer losses or otherwise adversely affect our business.

As of the date of this annual report, we do not employ any vessels under a long-term time charter agreement but we may enter into such agreements in the future. The ability and willingness of each of our counterparties to perform their obligations under a time charter, spot voyage or other agreement with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the tanker shipping industry and the overall financial condition of the counterparties. Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities such oil. In addition, in depressed market conditions, there have been reports of charterers renegotiating their charters or defaulting on their obligations under charters. Our customers may fail to pay charterhire or attempt to renegotiate charter rates. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters may be at lower rates given currently decreased tanker charter rate levels. When we employ a vessel in the spot charter market, we generally place such vessel in a tanker pool managed by our commercial manager that pertains to that vessel’s size class. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends, if any, in the future, and compliance with covenants in our credit facilities.

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Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the tanker industry.

We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protection and indemnity insurance, which include pollution risks, crew insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations, cash flows and financial condition and our available cash. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates in the future during adverse insurance market conditions.

Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain due to increased premiums or reduced or restricted coverage for losses caused by terrorist acts generally.

Because we obtain some of our insurance through protection and indemnity associations, which result in significant expenses to us, we may be required to make additional premium payments.

We may be subject to increased premium payments, or calls, in amounts based on our claim records, the claim records of our managers, as well as the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. In addition, our protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

RISKS RELATED TO OUR INDEBTEDNESS

Servicing our current or future indebtedness limits funds available for other purposes and if we cannot service our debt, we may lose our vessels.

Borrowing under our credit facilities requires us to dedicate a part of our cash flow from operations to paying interest on our indebtedness. These payments limit funds available for working capital, capital expenditures and other purposes, including further equity or debt financing in the future. Amounts borrowed under our credit facilities bear interest at variable rates. Increases in prevailing rates could increase the amounts that we would have to pay to our lenders, even though the outstanding principal amount remains the same, and our net income and cash flows would decrease. We expect our earnings and cash flow to vary from year to year due to the cyclical nature of the tanker industry. If we do not generate or reserve enough cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing plans, such as:

· seeking to raise additional capital;

· refinancing or restructuring our debt;

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· selling tankers; or

· reducing or delaying capital investments.

However, these alternative financing plans, if necessary, may not be sufficient to allow us to meet our debt obligations. If we are unable to meet our debt obligations or if some other default occurs under our credit facilities, our lenders could elect to declare that debt, together with accrued interest and fees, to be immediately due and payable and proceed against the collateral vessels securing that debt even though the majority of the proceeds used to purchase the collateral vessels did not come from our credit facilities.

Our credit facilities contain restrictive covenants which limit the amount of cash that we may use for other corporate activities, which could negatively affect our growth and cause our financial performance to suffer.

Our credit facilities impose operating and financial restrictions on us. These restrictions limit our ability, or the ability of our subsidiaries party thereto to:

· pay dividends and make capital expenditures if we do not repay amounts drawn under our credit facilities or if there is another default under our credit facilities;

· incur additional indebtedness, including the issuance of guarantees;

· create liens on our assets;

· change the flag, class or management of our vessels or terminate or materially amend the management agreement relating to each vessel;

· sell our vessels;

· merge or consolidate with, or transfer all or substantially all our assets to, another person; or

· enter into a new line of business.

Therefore, we will need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different from ours and we may not be able to obtain our lenders’ permission when needed. This may limit our ability to pay dividends to you if we determine to do so in the future, finance our future operations or capital requirements, make acquisitions or pursue business opportunities.

If the recent volatility in LIBOR rates continues, it will affect the interest rate under our existing credit facilities or future credit facilities which could affect our profitability, earnings and cash flow.

Amounts borrowed under our credit facilities are tied to LIBOR rates. LIBOR rates have recently been volatile, with the spread between those rates and prime lending rates widening significantly at times. These conditions are the result of the recent disruptions in the international credit markets. Because the interest rates borne by amounts that we may drawdown under our existing credit facilities or future credit facilities fluctuate with changes in the LIBOR rates, if this volatility were to continue, it would affect the amount of interest payable on amounts that we were to draw down from our existing credit facilities or future credit facilities, which in turn, would have an adverse effect on our profitability, earnings and cash flow.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

We were incorporated in the Republic of the Marshall Islands pursuant to the Marshall Islands Business Corporations Act on July 1, 2009. Our principal executive offices are located at 9, Boulevard Charles III, Monaco 98000 and our telephone number at that location is +377-9798-5716. Our stock has traded on the New York Stock Exchange (NYSE) under the symbol "STNG" since our initial public offering in April 2010.

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We provide seaborne transportation of crude oil and other petroleum products worldwide. We began our operations in October 2009, when Liberty, then a wholly-owned subsidiary of Simon Financial Limited, or Simon, a company owned and controlled by the Lolli-Ghetti family, transferred to us three vessel owning and operating subsidiary companies. On April 6, 2010, we completed our initial public offering for 12,500,000 shares of common stock at a public offering price $13.00 per share and commenced trading on the NYSE. Since that time we have expanded our fleet and as of the date of this report we own and operate 11 tankers (consisting of four LR1 tankers, three handymax tankers, two MR tankers, one LR2 tanker, and one post-panamax tanker), 12 chartered-in tankers (six Handymax tankers, five MR tankers and one LR2 tanker)] and have entered into contracts for the construction of seven newbuilding MR tankers, which are scheduled to be delivered to us between July 2012 and April 2013. We intend to continue to grow our fleet through timely and selective acquisitions of modern, high-quality tankers. We expect to focus future vessel acquisitions primarily on medium-sized product or coated tankers. However, we will also consider purchasing other classes of tankers if we determine that those vessels would, in our view, present favorable investment opportunities.

Fleet development

Owned vessels

On May 10, 2011, we took delivery of two MR product tankers, the STI Coral and STI Diamond, that we previously agreed to acquire for an aggregate purchase price of $70.0 million. We financed the purchase price through a combination of bank debt, a portion of the proceeds of our underwritten public offering in May 2011, and cash from operations. The ships were built in 2008 at the STX shipyard in Korea and were charter free at delivery.

In February 2012, we entered into agreements to sell three of our Handymax vessels: the STI Conqueror for $21.0 million, the STI Gladiator for $16.2 million, and the STI Matador for $16.2 million. The sale of the STI Conqueror closed in March 2012 and the sales of the STI Gladiator and STI Matador are expected to close in April 2012. We have received deposits of 10% of the purchase price on the sales of the STI Gladiator and STI Matador as of the date of this report. In connection with these sales, the availability of the Company's 2010 Revolving Credit Facility will decrease by approximately $31.0 million.

Time chartered-in vessels

On January 26, 2011, we took delivery of the Kraslava, a 2007 built Handymax ice-class 1B product tanker on a time charter-in arrangement for one year at a rate of $12,070 per day. In December 2011, this agreement was extended one month to February 26, 2012 and additional option periods were negotiated. The first option period on this vessel was exercised, extending the expiry date five months from February 26, 2012 to July 26, 2012. Subsequent to that, we have two consecutive optional periods each for three months at the current base rate of $12,070 per day. This vessel is currently operating in the Scorpio Handymax Tanker Pool.

On February 6, 2011 we took delivery of the Histria Azure, a 2007 built Handymax product tanker, on a time charter-in arrangement for one year at a rate of $12,250 per day. This vessel is currently off-hire and is expected to be re-delivered to us in April 2012. During 2011, this vessel operated in the Scorpio Handymax Tanker Pool from delivery through September 13, 2011 and has been off-hire through the date of this annual report. We have extended the term of the charter for this vessel for one year after the vessel is re-delivered to us at $12,000 per day. Pursuant to this charter agreement, we have an option to extend the term of the charter for four additional months at $12,250 per day and a second option to further extend the term of the charter agreement for an additional year at $13,650 per day.

On March 1, 2011, we took delivery of the Krisjanis Valdemars, a 2007 built Handymax ice-class 1B product tanker on a time charter-in arrangement for 10 months at a rate of $12,000 per day. The agreement also includes a profit and loss sharing provision whereby 50% of all profits and losses (the difference between the vessel's pool earnings and the charter hire expense) is shared with the owner of the vessel. In December 2011, we negotiated a two month extension and added three option periods to this agreement. The extension period expired on February 14, 2012 and the first option period was exercised, extending the expiry date four months to June 14, 2012. Subsequent to that, we have two consecutive optional periods of three and three months, respectively, at the base rate of $12,000 per day.

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On May 27, 2011, we took delivery of the Kazdanga, a 2007 built Handymax ice class 1B product tanker for one year at a rate of $12,345 per day with an option for us to extend the charter for an additional year at a rate of $13,335 per day. This vessel is currently operating in the Scorpio Handymax Tanker Pool.

In July 2011, we took delivery of two time chartered-in Handymax product tankers. The Histria Perla, a 2005 built Handymax product tanker and was delivered on July 15, 2011 and the Histria Coral, a 2006 built Handymax product tanker was delivered on July 17, 2011. Each vessel has been chartered-in for two years at a rate of $12,750 and $13,250 per day for the first and second years, respectively. Each charter agreement includes an option for us to extend the charter for an additional year at a rate of $14,500 per day.

On October 24, 2011, we took delivery of a 2006 built LR2 product tanker , the Khawr Aladid. The vessel was chartered-in for six months at $12,000 per day, and we currently have an option to extend the charter for a period of six months from delivery at $13,000 per day.

In February 2012, we agreed to charter-in a 2009 built MR product tanker, the Pacific Duchess. The vessel will be chartered-in for one year at $13,800 per day and was delivered on March 17, 2012. The agreement includes an option for us to extend the charter for an additional year at $14,800 per day.

In February 2012, we agreed to charter-in a 2007 built MR product tanker, the Targale. The vessel will be chartered in for two years at $14,500 per day and is expected to be delivered in May 2012. The agreement includes three consecutive options for us to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.

In March 2012, we agreed to charter-in a 2010 built MR product tanker, the Pacific Marchioness. The vessel will be chartered-in for one year at $13,900 per day and is expected to be delivered in April 2012. The agreement includes an option for us to extend the charter for an additional year at $14,900 per day.

In March 2012, we agreed to charter-in a 2007 built MR product tanker, the STX Ace6. The vessel will be chartered-in for two years at $14,150 per day and is expected to be delivered in May 2012. The agreement includes an option for us to extend the charter for an additional year at $15,150 per day.

In March 2012, we agreed to charter-in a 2012 built MR product tanker, the Freja Lupus. The vessel will be chartered-in for two years at $14,760 per day and is expected to be delivered in April, 2012. The agreement includes an option for us to extend the charter for an additional year at $16,000 per day.

Newbuilding vessels

On June 6, 2011, we announced that we entered into contracts with Hyundai to construct five 52,000 DWT product tankers for approximately $37.4 million each. These vessels will be the first to be delivered from the Hyundai yard with new propulsion technology including the ‘B’ type ultra-long stroke electronically controlled main engine. These enhancements are expected to reduce the vessels’ consumption of fuel by approximately 10% compared to existing designs. The vessels are scheduled to be delivered to us between July 2012 and October 2012.

On December 21, 2011, we entered into an agreement with Hyundai to construct a sixth MR product tanker, or the sixth newbuilding, with the same specifications described above, for approximately $36.4 million. This vessel is scheduled to be delivered to us in January 2013.

In February 2012, we entered into an agreement with Hyundai to construct a seventh MR product tanker, or the seventh newbuilding, with the same specifications described above for $36.0 million. The seventh newbuilding is scheduled to be delivered in April 2013.

We plan to finance our seven Newbuilding Vessels through a combination of cash on hand, bank debt, and cash from operations.

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B. Business Overview

We are engaged in seaborne transportation of crude oil and refined petroleum products in the international shipping markets. Our fleet as of the date of this annual report consisted of 11 wholly owned tankers (four LR1 tankers, three Handymax tankers, two MR tankers, one LR2 tanker and one post-Panamax tanker), 12 time chartered-in tankers (six Handymax tankers, five MR tankers and one LR2 tanker) and we have contracted for seven newbuilding MRs, which are scheduled to be delivered to us between July 2012 and April 2013. Below is our fleet list as of the date of this annual report:

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				Ice
	Vessel Name	Year Built	DWT	Class	Employment	Vessel type
	Owned vessels
1	STI Highlander	2007	37,145	1A	SHTP (1)	Handymax
2	STI Gladiator	2003	40,083	-	SHTP (1) *	Handymax
3	STI Matador	2003	40,096	-	SHTP (1) *	Handymax
4	STI Coral	2008	49,900	-	Spot	MR
5	STI Diamond	2008	49,900	-	Spot	MR
6	Noemi	2004	72,515	-	SPTP (2)	LR1
7	Senatore	2004	72,514	-	SPTP (2)	LR1
8	STI Harmony	2007	73,919	1A	SPTP (2)	LR1
9	STI Heritage	2008	73,919	1A	SPTP (2)	LR1
10	Venice	2001	81,408	1C	SPTP (2)	Post-Panamax
11	STI Spirit	2008	113,100	-	SLR2P (3)	LR2
	Total owned DWT		704,499
							Time Charter Info
							Daily Base
	Time Chartered-In vessels						Rate	Expiry (1)
12	Kraslava	2007	37,258	1B	SHTP (1)	Handymax	$12,070	26-Jul-12	(4)
13	Krisjanis Valdemars	2007	37,266	1B	SHTP (1)	Handymax	$12,000	14-Jun-12	(5)
14	Kazdanga	2007	37,312	1B	SHTP (1)	Handymax	$12,345	27-May-12	(6)
15	Histria Azure	2007	40,394	-	SHTP (1)	Handymax	$12,000	01-Apr-13	(7)
16	Histria Perla	2005	40,471	-	SHTP (1)	Handymax	$13,000	15-Jul-13	(8)
17	Histria Coral	2006	40,426	-	SHTP (1)	Handymax	$13,000	17-Jul-13	(8)
18	Khawr Aladid	2006	106,003	-	SLR2P (3)	LR2	$12,000	23-Apr-12	(9)
19	Pacific Duchess	2009	46,697	-	Spot	MR	$13,800	17-Mar-13	(10)
20	Targale	2007	49,999	-	Spot	MR	$14,500	10-May-14	(11)
21	Pacific Marchioness	2010	46,697	-	Spot	MR	$13,900	15-Apr-13	(12)
22	STX Ace 6	2007	46,161	-	Spot	MR	$14,150	01-May-14	(13)
23	Freja Lupus	2012	50,385	-	Spot	MR	$14,760	25-Apr-14	(14)
	Total time chartered-in DWT		579,069
	Newbuildings currently under construction
24	Hull 2332		52,000	(15)		MR
25	Hull 2333		52,000	(15)		MR
26	Hull 2334		52,000	(15)		MR
27	Hull 2335		52,000	(15)		MR
28	Hull 2336		52,000	(15)		MR
29	Hull 2361		52,000	(15)		MR
30	Hull 2362		52,000	(15)		MR
	Total newbuilding DWT		364,000
	Total DWT		1,647,568

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* We have agreed to sell these vessels to unrelated third parties and expect to deliver them to their buyers in April 2012.

(1)	This vessel operates in the Scorpio Handymax Tanker Pool (SHTP).  SHTP is operated by Scorpio Commercial Management (SCM).  SHTP and SCM are controlled by the Lolli-Ghetti family of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, is a member.
(2)	This vessel operates in Scorpio Panamax Tanker Pool (SPTP).  SPTP is operated by SCM and is controlled by the Lolli-Ghetti family.
(3)	This vessel operates in the Scorpio LR2 Pool (SLR2P).  SLR2P is operated by SCM and is controlled by the Lolli-Ghetti family.
(4)	This agreement has two consecutive optional periods for the Company to extend the charter of three and three months, respectively, at the current base rate of $12,070 per day.
(5)	This agreement has two consecutive optional periods for the Company to extend the charter three and three months, respectively, at the current base rate of $12,000 per day. The agreement also contains a 50% profit and loss sharing provision with the vessel owner whereby we split all of the vessel's profits and losses above $12,000/day with the vessel owner.
(6)	The agreement contains an option for the Company to extend the charter for an additional year at a rate of $13,335 per day.
(7)	This vessel is currently off-hire and is expected to be re-delivered to the Company in March 2012 on a one year time charter agreement at $12,000 per day.  The agreement contains an option for the Company to extend the term of the charter for four additional months at $12,250 per day and a second option to further extend the term of the charter agreement for an additional year at $13,650 per day.
(8)	Represents the average rate for the two year duration of the agreement.  The rate for the first year is $12,750 per day and the rate for the second year is $13,250 per day. The agreement contains an option for the Company to extend the charter for an additional year at a rate of $14,500 per day.
(9)	The agreement contains an option for the Company to extend for six months at $13,000 per day.
(10)	The agreement contains an option for the Company to extend for an additional year at $14,800 per day.  This vessel was delivered on March 17, 2012.
(11)	The agreement includes three consecutive options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.  This vessel is expected to be delivered on May 10, 2012.
(12)	The agreement contains an option for the Company to extend the charter for an additional year at a rate of $14,900 per day.
(13)	The agreement contains an option for the Company to extend the charter for an additional year at a rate of $15,150 per day.
(14)	The agreement contains an option for the Company to extend the charter for an additional year at a rate of $16,000 per day.
(15)	These seven Newbuilding Vessel are being constructed at Hyundai. Of our Newbuilding Vessels, the first five are expected to be delivered between July and September 2012, the sixth in January 2013 and the seventh in April 2013.

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Operations

Generally, we operate our vessels in commercial pools (such as the Scorpio LR2 Pool, Scorpio Panamax Tanker Pool, and Scorpio Handymax Tanker Pool), in the spot market or on time charters. As of the date of this annual report:

· STI Coral, STI Diamond and Pacific Duchess, were operating in the spot market.

· STI Spirit and Khawr Aladid were operating in the Scorpio LR2 Pool.

· Senatore, Venice, STI Harmony, STI Heritage and Noemi were operating in the Scorpio Panamax Tanker Pool.

· STI Conqueror, STI Matador, STI Gladiator, STI Highlander, Krisjanis Valdemars, Kraslava, Kazdanga, Histria Perla, Histria Coral and Histria Azure were operating in the Scorpio Handymax Tanker Pool.

Time Charters

Time charters give us a fixed and stable cash flow for a known period of time. Time charters also mitigate in part the seasonality of the spot market business, which is generally weaker in the second and third quarters of the year. In the future, we may opportunistically look to enter our vessels into time charter contracts. We may also enter into time charter contracts with profit sharing agreements, which enable us to benefit if the spot market increases.

Spot Market

A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of cargo or a specified total amount. Under spot market voyage charters, we pay voyage expenses such as port, canal and bunker costs. Spot charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuations derive from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels operating in the spot market generate revenue that is less predictable, but may enable us to capture increased profit margins during periods of improvements in tanker rates.

Commercial Pools

To increase vessel utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial managers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and contracts of affreightment, or COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market.

Commercial Management Agreement

Our vessels are commercially managed by Scorpio Commercial Management S.A.M., or SCM. SCM is a related party and SCM’s services include securing employment, in the spot market and on time charters, for the Company’s vessels. SCM also manages the Scorpio Group Pools. When our vessels operate in one of the commercial pools managed by SCM, we pay SCM an agent fee of $250 per vessel per day plus 1.25% commission per charter fixture for Panamax, LR1 and LR2 vessels and $300 per vessel per day for Handymax vessels. When our vessels are operating outside of such commercial pools, we pay SCM a fee of $250 per vessel per day plus a 1.25% commission of gross revenues per charter fixture for Panamax, LR1 and LR2 vessels and $300 per vessel per day for Handymax and MR vessels, which are the same fees SCM charges third parties.

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We have signed commercial management agreements for each of our vessels for a period of three years, which may be terminated upon a 16 month notice. We expect to sign similar agreements for additional vessels that we may acquire in the future.

Technical Management Agreement

Our vessels are technically managed by Scorpio Ship Management S.A.M., or SSM, a related party. SSM is owned the Lolli-Ghetti family. SSM facilitates vessel support such as crew, provisions, deck and engine stores, insurance, maintenance and repairs, and other services as necessary to operate the Company’s vessels such as drydocks and vetting/inspection under a technical management agreement. We currently pay SSM $548 per vessel per day to provide technical management services for each of our vessels. This fee is the same charged to third parties by SSM, and therefore the Company believes it represents a market rate for such services.

We signed the technical management agreements with SSM in December 2009 for a period of three years, which may be terminated upon a 16 month notice. We have also signed similar agreements for the vessels that we acquired and we expect to sign similar agreements for additional vessels that may acquire in the future.

Administrative Services Agreement

We have an administrative services agreement with our Administrator that provides accounting, legal compliance, financial, information technology services, and the provision of administrative staff and office space. Liberty, a company affiliated with us, acted as our Administrator until March 13, 2012 when the administrative services agreement was assigned to Scorpio Services Holding Limited, or SSH, a company owned the Lolli-Ghetti family. The effective date of the novation was November 9, 2009, the date that we first entered into the agreement with Liberty. We reimburse our current Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. Our Administrator also arranges vessel sales and purchases for us. Our Administrator services may be sub-contracted to other entities within the Scorpio Group.

We pay our Administrator a fee for arranging vessel purchases and sales for us, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. In 2011, we paid our Administrator $0.7 million in fees relating to vessel acquisitions. We believe this 1% fee on purchases and sales is customary in the tanker industry.

Further, pursuant to our administrative services agreement, our Administrator, has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.

Our administrative services agreement, whose effective commencement began in December 2009, has a duration of three years.

The International Oil Tanker Shipping Industry

All the information and data presented in this section, including the analysis of the various sectors of the oil tanker shipping industry has been provided by Drewry. Drewry has advised that the statistical and graphical information contained herein is drawn from its database and other sources. In connection therewith, Drewry has advised that: (a) certain information in Drewry’s database is derived from estimates or subjective judgments; (b) the information in the databases of other maritime data collection agencies may differ from the information in Drewry’s database; (c) while Drewry has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.

General

International seaborne oil and petroleum products transportation services are mainly provided by two types of operators: major oil company captive fleets (both private and state-owned) and independent shipowner fleets. Both types of operators transport oil under short-term contracts (including single-voyage “spot charters”) and long-term time charters with oil companies, oil traders, large oil consumers, petroleum product producers and government agencies. The oil companies own, or control through long-term time charters, approximately one third of the current world tanker capacity, while independent companies own or control the balance of the fleet. The oil companies use their fleets not only to transport their own oil, but also to transport oil for third-party charterers in direct competition with independent owners and operators in the tanker charter market.

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The current international financial crisis is affecting the international tanker market. It is expected that the global fleet will increase during 2012 because of the present order book. However, some shipping companies are now facing challenges in financing their large newbuilding programs, as shipping banks are more restrictive than before in granting credit. The current financial upheaval may delay deliveries of newbuildings and may also lead to the cancellation of newbuilding orders, and there have been reports of cancellations of tanker newbuildings from certain yards. Shipping companies with high debt or other financial commitments may be unable to continue servicing their debt, which could lead to foreclosure on vessels.

The oil transportation industry has historically been subject to regulation by national authorities and through international conventions. Over recent years, however, an environmental protection regime has evolved which has a significant impact on the operations of participants in the industry in the form of increasingly more stringent inspection requirements, closer monitoring of pollution-related events, and generally higher costs and potential liabilities for the owners and operators of tankers.

In order to benefit from economies of scale, tanker charterers will typically charter the largest possible vessel to transport oil or products, consistent with port and canal dimensional restrictions and optimal cargo lot sizes. A tanker’s carrying capacity is measured in deadweight tons, or dwt, which is the amount of crude oil measured in metric tons that the vessel is capable of loading. The oil tanker fleet is generally divided into the following five major types of vessels, based on vessel carrying capacity: (i) Ultra Large Crude Carrier, or ULCC, with a size range of approximately 320,000 to 450,000 dwt; (ii) Very Large Crude Carrier, or VLCC, with a size range of approximately 200,000 to 320,000 dwt; (iii) Suezmax-size range of approximately 120,000 to 200,000 dwt; (iv) Aframax-size range of approximately 80,000 to 120,000 dwt; (v) Panamax-size range of approximately 60,000 to 70,000 dwt; and (vi) small tankers of less than approximately 60,000 dwt. ULCCs and VLCCs typically transport crude oil in long-haul trades, such as from the Arabian Gulf to Rotterdam via the Cape of Good Hope. Suezmax tankers also engage in long-haul crude oil trades as well as in medium-haul crude oil trades, such as from West Africa to the East Coast of the United States. Aframax-size vessels generally engage in both medium-and short-haul trades of less than 1,500 miles and carry crude oil or petroleum products. Smaller tankers mostly transport petroleum products in short-haul to medium-haul trades.

Oil Tanker Demand

Demand for crude oil and refined petroleum products is affected by a number of factors including general economic conditions (including increases and decreases in industrial production), oil prices, environmental concerns, weather conditions, and competition from alternative energy sources.

As the following figures indicate, the world economy grew at a fairly consistent rate in the period from 2000 to 2008, but growth came to an abrupt halt in 2009 when the world went into a global recession. The downturn was short-lived and the most recent data suggest that the world economy returned to positive growth in 2010, with China and India being the main engines of growth.

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World Oil Consumption: 1990 - 2011

(Million Barrels Per Day)

(1) Provisional

Source: Drewry Maritime Research

World oil consumption has generally experienced sustained growth since 2000 with the exception of 2009 due to the downturn in the global economy. The provisional data for 2011 suggests that world oil demand rebounded strongly to reach 89.2 million barrels per day. Since 2000 it has grown at a compound annual growth rate (CAGR) of approximately 1.45%.

However, regionally, oil consumption is either static or declining in most of the developed world, but is increasing in most of the developing world. In recent years, Asia, in particular China has been the main generator of additional demand for oil, with this demand largely supplied from traditional sources such as the Middle East. In the period from 2000 to 2011, Chinese oil consumption grew by a CAGR of 6.4% to reach 9.5 million barrels per day.

Oil consumption on a per capita basis is still low in certain countries, such as China and India, when compared with the United States and Western Europe.

Seasonal trends also affect world oil consumption and consequently oil tanker demand. While trends in consumption do vary by season, peaks in tanker demand quite often precede seasonal consumption peaks, as refiners and suppliers anticipate consumer demand. Seasonal peaks in oil demand can broadly be classified into two main categories: increased demand prior to Northern Hemisphere winters as heating oil consumption increases and increased demand for gasoline prior to the summer driving season in the United States.

Production trends have naturally followed the underlying pattern in oil consumption, allowing for the fact that changes in the level of oil inventories also play a part in determining production levels.

Production and exports from the Middle East (largely OPEC) have historically had a significant impact on the demand for tanker capacity, and, consequently, on tanker charter hire rates, due to the relatively long distances between this supply source and typical destination ports. Oil exports from short-haul regions, such as Latin America and the North Sea, are significantly closer to ports used by the primary consumers of such exports, which results in shorter average voyage length as compared to oil exports from the Middle East. Therefore, production in short-haul regions historically has had less of an impact on the demand for larger vessels while increasing the demand for vessels in the Handy, Panamax and Aframax market segments.

Oil Refinery Capacity

Oil refineries also vary greatly in the quantity, variety and specification of products that they produce, and it is common for tankers to take products into and out of the same refinery. This global multi-directional trade pattern enables owners and operators of product tankers to engage in charters of triangulation, and thereby maximize the revenue.

Changes in refinery throughput are to a certain extent driven by changes in the location of capacity and capacity increases are taking place mostly in the developing world, especially in Asia. In turn this is leading to changes in voyage patterns and longer voyages.

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In response to growing domestic demand, Chinese refinery throughput has grown at the fastest rate of any global region in the last decade, with the Middle East and other emerging economies following behind. By contrast, refinery throughput in North America has actually declined in the last decade.

The shift in global refinery capacity from the developed to the developing world is likely to continue as refinery development plans are heavily focused on areas such as Asia and the Middle East, with relatively little capacity additions planned for North America and Europe.

World Oil Trades

World oil trades are naturally the result of geographical imbalances between areas of oil consumption and production, although it is important to recognize that in sectors such refined petroleum products arbitrage can have an impact on trade flows.

The volume of crude oil moved by sea each year also reflects the underlying changes in world oil consumption and production. Seaborne trade in crude oil in 2011 is provisionally estimated at 1.93 billion tons, while refined petroleum products movements are provisionally estimated at 895 million tons.

Demand for oil tankers is primarily determined by the volume of crude oil and refined petroleum products transported and the distances over which they are transported. Tanker demand is generally expressed in ton miles and is measured as the product of the volume of oil carried (measured in metric tons) multiplied by the distance over which it is carried (measured in miles).

The transportation of crude oil is typically unidirectional, in that most oil is transported from a few areas of production to many regions of consumption, where it is refined into petroleum products. Conversely, the transportation of refined petroleum products and associated cargoes is multi-directional, in that there are several areas of both production and consumption.

The growth in the volume of oil moved by sea since 2000 had been quite modest, but the absolute volume of trade hides the fact that geographical changes in the pattern or trade have had a positive impact on tanker demand when expressed in terms of ton miles. In the period from 2000 to 2011, ton mile demand in the tanker sector grew at a CAGR of 2.7%, whereas the overall increase in trade over the same period was equivalent to a CAGR of 2.2%.

As a result of changes in the pattern of trade the average haul length of refined product trades has risen from a recent market low of 2,631 miles (loaded voyage only) in 2000 to 3,940 miles in 2011, equivalent to a CAGR of 2.3%.

Oil Tanker Supply

The world oil tanker fleet is generally divided into five major types of vessel classifications, based on vessel carrying capacity. Additionally, the tanker fleet is divided between crude tankers that carry crude oil or residual fuel oil (“dirty products”), and product tankers that carry refined petroleum products (“clean products”) such as gasoline, jet fuel, kerosene, naphtha and gas oil.

While product tankers can carry dirty products, they generally do not switch between clean and dirty cargoes, as a vessel’s tank must be cleaned prior to loading a different cargo type. Product tankers do not form a distinct vessel classification, but are identified on the basis of various factors, including technical and trading histories.

A number of tankers also have the capability to carry chemicals as well as refined petroleum products. These ships are sometimes referred to as product/chemical tankers and they move between the carriage of chemicals or refined petroleum products depending on market conditions and employment opportunities. The following analysis focuses on straight product tankers and the ships with product/chemical capability are covered in the section dealing with chemical tankers which follows.

The main fleet categories are Very Large Crude Carrier (VLCC), Suezmax, Aframax, Panamax and Handy oil tankers.

Category	Size Range - Dwt
Handy	10-49,999
Panamax	50-79,999
Aframax	80-119,999
Suezmax	120-199,999
VLCC	200,000 +

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The supply of tankers is measured in deadweight tons, or dwt. The supply of tanker capacity is determined by the age and size of the existing global fleet, the number of vessels on order and the number of ships removed from the fleet by scrapping and international regulations. Other factors which can affect the short-term supply of tankers include the number of combined carriers (vessels capable of trading wet and dry cargoes) trading in the oil market and the number of tankers in storage, dry-docked, awaiting repairs or otherwise not available or out of commission (collectively, “lay-up” or total inactivity).

The oil tanker fleet at the end of February 2012 consisted of 3,165 vessels with combined capacity of 402.6 million dwt.

Oil Tanker Fleet – February 29, 2012

Deadweight Tons	Number of				Capacity
(dwt)	Vessels		% of Fleet		(million dwt)		% of Fleet
10-49,999		780		27.8		27.3		6.8
50-79,999		449		31.3		31.5		7.9
80-119,999		906		96.5		96		24.1
120-199,999		444		68.5		68.6		17.2
200-320,000		554		168.0		165.8		41.6
320,000+		32		10.5		9.5		2.4
		3,165		402.6		398.7		100.0

Source: Drewry Maritime Research

Between the end of 2000 and the end of 2011 the size of the total tanker fleet grew by close to 50% with increases in fleet size taking place across all sectors, with the exception of the small ship category.

The Product Tanker Fleet

As of February 29, 2012, the product tanker fleet comprised 1,234 ships of 69.4 million dwt.

World Product⁽¹⁾ Tanker Fleet 29, February 2012

Size Category	Size Range (Deadweight Tons)	Number of Vessels	% of Fleet	Total Capacity (Million Dwt )	% of Fleet (Dwt)
LR2	>80,000	183	14.8%	20.0	28.8%
LR1	50,000-79,999	330	26.7%	23.1	33.3%
MR2	25,000-49,999	565	45.8%	24.0	34.6%
MR1	10,000-24,999	156	12.6%	2.3	3.3%
Total		1,234	100.0%	69.4	100.0%

(1) Excludes chemical tankers

Source: Drewry Maritime Research

Over the years, the supply of the smallest product tanker category (10,000-29,999 dwt) fleet has declined in favour of the larger ships that are more suited to the long-haul routes.

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Oil Tanker Orderbook

As of February 29, 2012, the tanker orderbook amounted to 485 tankers of 74.8 million dwt, equivalent to 18.6% of the current fleet. At its peak in 2008 the orderbook to existing fleet ratio was just over 40% and the fact that it has fallen to under 20% reflects the fact that deliveries from the orderbook have more than outpaced new orders being placed. The current total tanker orderbook (crude and products) and the schedule of deliveries are shown below.

The Total Tanker Fleet & Orderbook: February 29, 2012

Size	Fleet			2012			2013			2014			2015			Total			% of
		No.	Dwt		No.	Dwt		No.	Dwt		No.	Dwt		No.	Dwt		No.	Dwt		Fleet
10-50,000		780	27,836		41	1,606		13	533		2	75		0	0		56	2,214		8.0	%
50-80,000		449	31,280		40	2,522		50	2,878		8	448		0	0		98	5,848		18.7	%
80-120,000		906	96,489		55	6,074		23	2,495		9	998		0	0		87	9,566		9.9	%
120-200,000		444	68,458		65	10,172		48	7,355		11	1,614		0	0		124	19,141		28.0	%
200-320,000		554	168,040		33	10,364		16	4,997		8	2,506		0	0		57	17,867		10.6	%
320,000+		32	10,506		28	8,960		29	9,280		6	1,920		0	0		63	20,160		191.9	%
Total		3,165	402,609		262	39,697		179	27,539		44	7,561		0	0		485	74,797		18.6	%

Source: Drewry Maritime Research

Product Tanker Orderbook

As of February 29, 2012, the product tanker orderbook amounted to 165 ships of 10.3 million dwt, equivalent to 14.8% of the current fleet.

World Product Tanker Orderbook, February 29, 2012

Size Category	Deadweight Tons	Number of Vessels	% of Ex Fleet (No)	Total Capacity (Million Dwt)	% Ex Fleet (Dwt)
LR2	>80,000	28	15.3%	3.1	15.5%
LR1	50,000-79,999	87	26.4%	5.1	22.1%
MR2	25,000-49,999	46	8.1%	2.0	8.3%
MR1	10,000-24,999	4	2.6%	0.1	4.3%
Total		165	13.4%	10.3	14.8%

Source: Drewry Maritime Research

World Product Tanker Orderbook Delivery Schedule, February 29, 2012

Size	2012		2013		2014		2015+		Total
('000 dwt)	No.	‘000 Dwt	No.	‘0000 Dwt	No.	‘000 Dwt	No.	‘000 Dwt	No.	‘000 Dwt
10-25	4	64		0		0		0	4	64
25-50	33	1,463	11	450	2	75		0	46	1,988
50-80	36	2,220	42	2,370	8	448	1	50	87	5,088
80+	21	2,348	5	538	2	228		0	28	3,114
Total	94	6,096	58	3,358	12	751	1	50	165	10,255

Source: Drewry Maritime Research

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The Product Tanker Freight Market

Freight Rates

Tanker charter hire rates and vessel values for all tankers are influenced by the supply and demand for tanker capacity. However, the product segment generally appears less volatile than other crude market segments because these vessels mainly transport refined petroleum products that are not subject to the same degree of volatility as the crude oil market. Also, in general terms time charter rates are less volatile than spot rates, because they reflect the fact that the vessel is fixed for a longer period of time. In the spot market, rates will reflect the immediate underlying conditions in vessel supply and demand and are thus prone to more volatility. The recent trends in rates in the time charter equivalent of spot rates and time charter rates are shown in the tables below.

Tanker charter hire rates and vessel values for all tankers are strongly influenced by the supply and demand for tanker capacity. Small changes in tanker utilization have historically led to relatively large fluctuations in tanker charter rates for VLCCs, more moderate price volatility in the Suezmax, Aframax and Panamax markets and less volatility in the Handy market compared to the tanker market as a whole.

From 2005 to 2007/2008 time charter rates for all sizes of oil tankers rose quite steeply, reflecting the fact that buoyant demand for oil and increased seaborne movements generated additional demand for tanker capacity. This led to a much tighter balance between vessel demand and supply and as consequence freight rates rose. However, as the world economy weakened in the second half of 2008 demand for oil also fell and this had a negative impact on tanker demand and freight rates. Rates therefore declined in 2009, only to stage a modest recovery in the early part of 2010, before falling once again in the summer months and then remaining weak in all of 2011 and into 2012, especially for the larger sizes of oil tanker.

Oil Tanker One Year Time Charter Rates: 2000-February 2012

(US$/Day Period Averages)

Size Category	Handysize	Handymax	Aframax	Suezmax	VLCC
DWT	30,000	45,000	90-95,000	150,000	280,000
2000	12,454	13,958	18,854	27,042	35,250
2001	15,583	17,563	23,125	30,500	37,958
2002	11,417	13,288	16,896	17,750	23,458
2003	13,267	14,846	19,146	26,104	33,604
2004	15,629	19,029	29,500	37,875	53,900
2005	18,854	25,271	35,021	42,292	60,125
2006	21,417	26,792	35,233	42,667	55,992
2007	22,000	24,500	33,143	43,042	53,333
2008	21,438	23,092	34,708	46,917	74,662
2009	13,675	14,850	19,663	27,825	38,533
2010	11,000	12,388	18,571	25,967	36,083
2011	12,300	13,600	15,200	19,700	24,600
Feb 2012	11,800	13,600	13,700	17,000	18,000

Source: Drewry Maritime Research

In general terms, time charter rates are less volatile than spot rates, because they reflect the fact that the vessel is fixed for a longer period of time. In the spot market, rates will reflect the immediate underlying conditions in vessel supply and demand and are thus prone to more volatility.

Environmental and Other Regulations

Government laws and regulations significantly affect the ownership and operation of our vessels. We are subject to various international conventions, laws and regulations in force in the countries in which our vessels may operate or are registered. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modification and implementation costs.

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A variety of government, quasi-governmental and private organizations subject our vessels to both scheduled and unscheduled inspections. These organizations include the local port authorities, national authorities, harbor masters or equivalent entities, classification societies, relevant flag state (country of registry) and charterers, particularly terminal operators and oil companies. Some of these entities require us to obtain permits, licenses, certificates and approvals for the operation of our vessels. Our failure to maintain necessary permits, licenses, certificates or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of the vessels in our fleet, or lead to the invalidation or reduction of our insurance coverage.

We believe that the heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for tankers that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with applicable local, national and international environmental laws and regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations; however, because such laws and regulations are frequently changed and may impose increasingly strict requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that results in significant oil pollution or otherwise causes significant adverse environmental impact, such as the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, or the IMO, is the United Nations agency for maritime safety and the prevention of pollution by ships. The IMO has adopted several international conventions that regulate the international shipping industry, including but not limited to the International Convention on Civil Liability for Oil Pollution Damage of 1969, generally referred to as CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, and the International Convention for the Prevention of Pollution from Ships of 1973, or the MARPOL Convention. The MARPOL Convention is broken into six Annexes, each of which establishes environmental standards relating to different sources of pollution: Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, adopted by the IMO in September of 1997, relates to air emissions.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution. Effective May 2005, Annex VI sets limits on nitrogen oxide emissions from ships whose diesel engines were constructed (or underwent major conversions) on or after January 1, 2000. It also prohibits “deliberate emissions” of “ozone depleting substances,” defined to include certain halons and chlorofluorocarbons. “Deliberate emissions” are not limited to times when the ship is at sea; they can for example include discharges occurring in the course of the ship’s repair and maintenance. Emissions of “volatile organic compounds” from certain tankers, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls (PCBs)) are also prohibited. Annex VI also includes a global cap on the sulfur content of fuel oil (see below).

The IMO’s Maritime Environment Protection Committee, or MEPC, adopted amendments to Annex VI on October 10, 2008, which amendments were entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulphur contained in any fuel oil used on board ships. By January 1, 2012, the amended Annex VI requires that fuel oil contain no more than 3.50% sulfur (from the current cap of 4.50%). By January 1, 2020, sulfur content must not exceed 0.50%, subject to a feasibility review to be completed no later than 2018.

Sulfur content standards are even stricter within certain “Emission Control Areas” (“ECAs”). By July 1, 2010, ships operating within an ECA may not use fuel with sulfur content in excess of 1.0% (from 1.50%), which is further reduced to 0.10% on January 1, 2015. Amended Annex VI establishes procedures for designating new ECAs. Currently, the Baltic Sea and the North Sea have been so designated. Effective August 1, 2012, certain coastal areas of North America will also be designated ECAs, as will (effective January 1, 2014), the United States Caribbean Sea. If other ECAs are approved by the IMO or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the EPA or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

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Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. The U.S. Environmental Protection Agency promulgated equivalent (and in some senses stricter) emissions standards in late 2009. As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

Safety Management System Requirements

The IMO also adopted the International Convention for the Safety of Life at Sea, or SOLAS, and the International Convention on Load Lines, or LL, which impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS and LL standards.

Our operations are also subject to environmental standards and requirements contained in the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO under Chapter IX of SOLAS. The ISM Code requires the owner of a vessel, or any person who has taken responsibility for operation of a vessel, to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that has been developed for our vessels for compliance with the ISM Code.

The ISM Code requires that vessel operators also obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents of compliance for its offices and safety management certificates for all of our vessels for which the certificates are required by the ISM Code. These documents of compliance and safety management certificates are renewed as required.

Noncompliance with the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in, or invalidation of, available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports.

Pollution Control and Liability Requirements

IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatory nations to such conventions. For example, many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976, 1984, and 1992, and amended in 2000, or the CLC. Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certain limits on liability, expressed using the International Monetary Fund currency unit of Special Drawing Rights. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or reckless act or omission where the shipowner knew pollution damage would probably result. The CLC requires ships covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We believe that our protection and indemnity insurance will cover the liability under the plan adopted by the IMO.

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The IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

In addition, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements to be replaced in time with mandatory concentration limits. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. To date, there has not been sufficient adoption of this standard for it to take force. However, Panama may adopt this standard in the relatively near future, which would be sufficient for it to take force. Upon entry into force of the BWM Convention, mid-ocean ballast exchange would be mandatory. Vessels would be required to be equipped with a ballast water treatment system that meets mandatory concentration limits not later than the first intermediate or renewal survey, whichever occurs first, after the anniversary date of delivery of the vessel in 2014, for vessels with ballast water capacity of 1500-5000 cubic meters, or after such date in 2016, for vessels with ballast water capacity of greater than 5000 cubic meters. If mid-ocean ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance could increase for ocean carriers. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on our operations.

The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

U.S. Regulations

The U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade in the United States, its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S. territorial sea and its 200 nautical mile exclusive economic zone. The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Accordingly, both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:

· injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;

· injury to, or economic losses resulting from, the destruction of real and personal property;

· net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;

· loss of subsistence use of natural resources that are injured, destroyed or lost;

· lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and

· net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

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OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective July 31, 2009, the U.S. Coast Guard adjusted the limits of OPA liability to the greater of $2,000 per gross ton or $17.088 million for any double-hull tanker that is over 3,000 gross tons (subject to periodic adjustment for inflation), and our fleet is entirely composed of vessels of this size class. These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident where the responsibility party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damage for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA both require owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We have provided such evidence and received certificates of financial responsibility from the U.S. Coast Guard’s for each of our vessels as required to have one.

OPA permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, however, in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes, including the raising of liability caps under OPA. Compliance with any new requirements of OPA may substantially impact our cost of operations or require us to incur additional expenses to comply with any new regulatory initiatives or statutes.

Through our P&I Club membership, we expect to maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. Furthermore, many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law.

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The United States Environmental Protection Agency, or EPA, has enacted rules requiring a permit regulating ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters under the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP. For a new vessel delivered to an owner or operator after September 19, 2009 to be covered by the VGP, the owner must submit a Notice of Intent, or NOI, at least 30 days before the vessel operates in United States waters. The EPA has proposed a draft 2013 Vessel General Permit to replace the current Vessel General Permit upon its expiration on December 19, 2013, authorizing discharges incidental to operations of commercial vessels. The draft permit also contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in US waters, more stringent requirements for exhaust gas scrubbers and the use of environmentally acceptable lubricants.

U.S. Coast Guard regulations adopted and proposed for adoption under the U.S. National Invasive Species Act, or NISA, impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters, which could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures, and/or otherwise restrict our vessels from entering U.S. waters. In 2009, the Coast Guard proposed new ballast water management standards and practices, including limits regarding ballast water releases. As of November 2011, the Office of Management and Budget continues to review this proposed rule.

Compliance with the EPA and the U.S. Coast Guard regulations could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. Member States were required to enact laws or regulations to comply with the directive by the end of 2010. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. However, in July 2011, the MEPC adopted two new sets of mandatory requirements to address greenhouse gas emissions from ships that will enter into force in January 2013. Currently operating ships will be required to develop Ship Energy Efficiency Management Plans, and minimum energy efficiency levels per capacity mile will apply to new ships. These requirements could cause us to incur additional compliance costs. The IMO is also considering the development of market-based mechanisms to reduce greenhouse gas emissions from ships. The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine vessels, and in January 2012 the European Commission launched a public consultation on possible measures to reduce greenhouse gas emissions from ships. In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources. Although the mobile source emissions regulations do not apply to greenhouse gas emissions from vessels, such regulation of vessels is foreseeable, and the EPA has in recent years received petitions from the California Attorney General and various environmental groups seeking such regulation. Any passage of climate control legislation or other regulatory initiatives by the IMO, European Union, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol, that restrict emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with certainty at this time.

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International Labour Organization

The International Labour Organization (ILO) is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO has adopted the Maritime Labor Convention 2006 (MLC 2006). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance will be required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. The MLC 2006 will enter into force one year after 30 countries with a minimum of 33% of the world's tonnage have ratified it. The MLC 2006 has not yet been ratified, but its ratification would require us to develop new procedures to ensure full compliance with its requirements.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. The regulations also impose requirements on certain ports and facilities, some of which are regulated by the U.S. Environmental Protection Agency (EPA).

Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new Chapter V became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates compliance with the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism. Amendments to SOLAS Chapter VII, made mandatory in 2004, apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”).

To trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state. Among the various requirements are:

· on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status;

· on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;

· the development of vessel security plans;

· ship identification number to be permanently marked on a vessel’s hull;

· a continuous synopsis record kept onboard showing a vessel’s history, including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and

· compliance with flag state security certification requirements.

Ships operating without a valid certificate, may be detained at port until it obtains an ISSC, or it may be expelled from port, or refused entry at port.

The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non-U.S. vessels that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel’s compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by MTSA, SOLAS and the ISPS Code, and our fleet is in compliance with applicable security requirements.

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Inspection by classification societies

Every seagoing vessel must be “classed” by a classification society. The classification society certifies that the vessel is ‘‘in class,’’ signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

For maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:

· Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, within three months before or after each anniversary date of the date of commencement of the class period indicated in the certificate.

· Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys are to be carried out at or between the occasion of the second or third annual survey.

· Class Renewal Surveys. Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a vessel owner has the option of arranging with the classification society for the vessel’s hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.

At an owner’s application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years.

Most vessels are also dry-docked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a ‘‘recommendation’’ which must be rectified by the ship owner within prescribed time limits.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in-class” by a classification society which is a member of the International Association of Classification Societies. All our vessels are certified as being “in-class” by American Bureau of Shipping. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard purchase contracts and memoranda of agreement. If the vessel is not certified on the scheduled date of closing, we have no obligation to take delivery of the vessel.

In addition to the classification inspections, many of our customers regularly inspect our vessels as a precondition to chartering them for voyages. We believe that our well-maintained, high-quality vessels provide us with a competitive advantage in the current environment of increasing regulation and customer emphasis on quality.

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Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which in certain circumstances imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for vessel-owners and operators trading in the United States market. While we believe that our present insurance coverage is adequate, not all risks can be insured against, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Marine and War Risks Insurance

We have in force marine and war risks insurance for all of our vessels. Our marine hull and machinery insurance covers risks of particular average and actual or constructive total loss from collision, fire, grounding, engine breakdown and other insured named perils up to an agreed amount per vessel. Our war risks insurance covers the risks of particular average and actual or constructive total loss from confiscation, seizure, capture, vandalism, sabotage, and other war-related named perils. We have also arranged coverage for increased value for each vessel. Under this increased value coverage, in the event of total loss of a vessel, we will be able to recover amounts in excess of those recoverable under the hull and machinery policy in order to compensate for additional costs associated with replacement of the loss of the vessel. Each vessel is covered up to at least its fair market value at the time of the insurance attachment and subject to a fixed deductible per each single accident or occurrence, but excluding actual or constructive total loss.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, and covers our third party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses resulting from injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by mutual protection and indemnity associations, or “clubs.” Subject to the “capping” discussed below, our coverage, except for pollution, is unlimited.

As a member of a P&I Club that is a member of the International Group of P&I Clubs, or the International Group, we carry protection and indemnity insurance coverage for pollution of $1 billion per vessel per incident. The P&I Clubs that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. Although the P&I Clubs compete with each other for business, they have found it beneficial to pool their larger risks under the auspices of the International Group. This pooling is regulated by a contractual agreement which defines the risks that are to be pooled and exactly how these risks are to be shared by the participating P&I Clubs. We are subject to calls payable to the associations based on its claim records as well as the claim records of all other members of the individual associations and members of the pool of P&I Clubs comprising the International Group.

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C. Organizational Structure

The following is a list of Scorpio Tankers Inc. subsidiaries as of December 31, 2011, all of which were 100% owned.

Company	Incorporated in
Noemi Shipping Company Limited	The Republic of The Marshall Islands
Senatore Shipping Company Limited	The Republic of The Marshall Islands
Venice Shipping Company Limited	The Republic of The Marshall Islands
STI Harmony Shipping Company Limited	The Republic of The Marshall Islands
STI Heritage Shipping Company Limited	The Republic of The Marshall Islands
STI Conqueror Shipping Company Limited	The Republic of The Marshall Islands
STI Matador Shipping Company Limited	The Republic of The Marshall Islands
STI Gladiator Shipping Company Limited	The Republic of The Marshall Islands
STI Highlander Shipping Company Limited	The Republic of The Marshall Islands
STI Spirit Shipping Company Limited	The Republic of The Marshall Islands
STI Coral Shipping Company Limited	The Republic of The Marshall Islands
STI Diamond Shipping Company Limited	The Republic of The Marshall Islands
STI Amber Shipping Company Limited	The Republic of The Marshall Islands
STI Topaz Shipping Company Limited	The Republic of The Marshall Islands
STI Ruby Shipping Company Limited	The Republic of The Marshall Islands
STI Garnet Shipping Company Limited	The Republic of The Marshall Islands
STI Onyx Shipping Company Limited	The Republic of The Marshall Islands
STI Sapphire Shipping Company Limited	The Republic of The Marshall Islands
STI Emerald Shipping Company Limited	The Republic of The Marshall Islands
STI Chartering and Trading Limited	The Republic of The Marshall Islands
Sting LLC	State of Delaware, United States of America

D. Property, Plant and Equipment

For a description of our fleet, see “ITEM 4.A. – History and Development of the Company” and “ ITEM 4.B. Business Overview – Our Fleet”.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

The following presentation of management’s discussion and analysis of results of operations and financial condition should be read in conjunction with our consolidated financial statements, accompanying notes thereto and other financial information appearing in “ITEM 18. Financial Statements”. You should also carefully read the following discussion with “Risk Factors,” “The International Tanker Industry,” “Cautionary Statement Regarding Forward-Looking Statements.” The consolidated financial statements as of December 31, 2011 and 2010 and for each the three years in the period ended December 31, 2011 have been prepared in accordance with IFRS as issued by the IASB. The consolidated financial statements are presented in U.S. Dollars ($) unless otherwise indicated. Any amounts converted from another non-U.S. currency to U.S. Dollars in this annual report are at the rate applicable at the relevant date, or the average rate during the applicable period. Prior to October 1, 2009, our historical consolidated financial statements were prepared on a carve-out basis from the financial statements of Liberty and include all assets, liabilities and results of operations of our three vessel-owning subsidiaries, formerly subsidiaries of Liberty, for those periods.

We anticipate additional opportunities to expand our fleet through acquisitions of tankers, and we believe that recent downward pressure on tanker values will present attractive investment opportunities to ship operators that have the necessary capital resources. We may purchase secondhand vessels that meet our specifications or newbuilding vessels, either directly from shipyards or from the current owners with shipyard contracts. The timing of these acquisitions will depend on our ability to identify suitable vessels on attractive purchase terms. Since our initial public offering, we have purchased nine vessels, entered into agreements to sell three vessels, time chartered-in 13 vessels and have contracted to build seven newbuilding vessels.

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We generate revenues by charging customers for the transportation of their crude oil and other petroleum products using our vessels. Historically, these services generally have been provided under the following basic types of contractual relationships:

· Voyage charters, which are charters for short intervals that are priced on current, or “spot,” market rates.

· Time charters, which are chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.

· Commercial Pools, whereby we participate with other shipowners to operate a large number of vessels as an integrated transportation system, which offers customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and contracts of affreightment (described below), thus generating higher effective time charter equivalent, or TCE, revenues than otherwise might be obtainable in the spot market.

· For all types of vessels in contractual relationships, we are we are responsible for crewing and other vessel operating costs for our owned vessels and the charter hire expense for vessels that we time charter-in.

The table below illustrates the primary distinctions among these different employment arrangements:

	Voyage Charter	Time Charter	Commercial Pool
Typical contract length	Single voyage	One year or more	Varies
Hire rate basis(1)	Varies	Daily	Varies
Voyage expenses(2)	We pay	Customer pays	Pool pays
Vessel operating costs for owned vessels(3)	We pay	We pay	We pay
Charterhire expense for vessels chartered-in(3)	We pay	We pay	We pay
Off-hire (4)	Customer does not pay	Customer does not pay	Pool does not pay

(1)	“Hire rate” refers to the basic payment from the charterer for the use of the vessel.
(2)	“Voyage expenses” refers to expenses incurred due to a vessel’s traveling from a loading port to a discharging port, such as fuel (bunker) cost, port expenses, agent’s fees, canal dues and extra war risk insurance, as well as commissions.
(3)	Defined below under “—Important Financial and Operational Terms and Concepts.”
(4)	“Off-hire” refers to the time a vessel is not available for service due primarily to scheduled and unscheduled repairs or drydockings.

As of December 31, 2011, certain of our owned and time chartered-in vessels (Venice, Senatore, Noemi, STI Conqueror, STI Gladiator, STI Harmony, STI Heritage, STI Highlander, STI Matador, STI Spirit, Krisjanis Valdemars, Kraslava, Kazdanga, Khawr Aladid, Histria Perla and Histria Coral), were operated in Scorpio Group Pools managed by SCM. The majority of the vessels in these pools trade in the spot market. As of December 31, 2011, the STI Coral and STI Diamond were traded in the spot market. In addition, we time-chartered-in the Pacific Duchess, Targale and Pacific Marchioness after December 31, 2011 and these vessels trade in the spot market.

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IMPORTANT FINANCIAL AND OPERATIONAL TERMS AND CONCEPTS

We use a variety of financial and operational terms and concepts. These include the following:

Vessel revenues. Vessel revenues primarily include revenues from time charters, pool revenues and voyage charters (in the spot market). Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel revenues are also affected by the mix of business between vessels on time charter, vessels in pools and vessels operating on voyage charter. Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to prevailing market rates.

Voyage charters. Voyage charters or spot voyages are charters under which the customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. The shipowner pays all voyage expenses and vessel operating costs unless the vessel to which the charter relates has been time chartered-in.

Voyage expenses. Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters. These expenses are subtracted from voyage charter revenues to calculate time charter equivalent revenues.

Vessel operating costs. We are responsible for vessel operating costs, which include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses, and technical management fees. The two largest components of our vessel operating costs are crews, and repairs and maintenance. Expenses for repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically occur during periodic drydocking. Please read “Drydocking” below. We expect these expenses to increase as our fleet matures and to the extent that it expands.

Additionally, these costs include technical management fees that we paid to Scorpio Ship Management, or SSM, which is controlled by the Lolli-Ghetti family. Pursuant to our technical management agreement, SSM provides us with technical services and we provide them with the ability to subcontract technical management of our vessels with our approval. We believe our technical management fees for the year ended December 31, 2011 were at market rates because they are the same rates as those charged to third-party vessels managed by SSM.

Charterhire. Charterhire is the amount we pay the owner for time chartered-in vessels. The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates. The vessel’s owner is responsible for crewing and other vessel operating costs

Drydocking. We periodically drydock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months. We capitalize a substantial portion of the costs incurred during drydocking and amortize those costs on a straight-line basis from the completion of a drydocking to the estimated completion of the next drydocking. We immediately expense costs for routine repairs and maintenance performed during drydocking that do not improve or extend the useful lives of the assets. The number of drydockings undertaken in a given period and the nature of the work performed determine the level of drydocking expenditures.

Depreciation. Depreciation expense typically consists of:

· charges related to the depreciation of the historical cost of our fleet (less an estimated residual value) over the estimated useful lives of the vessels; and

· charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking.

Time charter equivalent revenue or rates. We report time charter equivalent, or TCE, revenues, a non-IFRS measure, because our management believes it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. TCE revenue is also included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods and because we believe that it presents useful information to investors. TCE revenue is vessel revenue less voyage expenses, including bunkers and port charges. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and is generally calculated by taking TCE revenue and dividing that figure by the number of revenue days in the period. For a reconciliation of TCE revenue, deduct voyage expenses from revenue on our Statement of Profit or Loss.

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Revenue days. Revenue days are the total number of calendar days our vessels were in our possession during a period, less the total number of off-hire days during the period associated with major repairs or drydockings. Consequently, revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show changes in net vessel revenues between periods.

Average number of vessels. Historical average number of vessels consists of the average number of vessels that were in our possession during a period. We use average number of vessels primarily to highlight changes in vessel operating costs and depreciation and amortization.

Contract of affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the charterer and shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the individual voyage scheduling at a future date while the shipowner may use different vessels to perform these individual voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with large fleets of the same vessel type. All of the ship’s operating, voyage and capital costs are borne by the shipowner while the freight rate normally is agreed on a per cargo ton basis.

Commercial pools. To increase vessel utilization and revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers.

Operating days. Operating days are the total number of available days in a period with respect to the owned vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned vessels, not our chartered-in vessels.

ITEMS YOU SHOULD CONSIDER WHEN EVALUATING OUR RESULTS

You should consider the following factors when evaluating our historical financial performance and assessing our future prospects:

Our vessel revenues are affected by cyclicality in the tanker markets. The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those vessels we trade in the spot market. We employ a chartering strategy to capture upside opportunities in the spot market while using fixed-rate time charters to reduce downside risks, depending on SCM’s outlook for freight rates, oil tanker market conditions and global economic conditions. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of, and demand for, tanker capacity. The supply of tanker capacity is influenced by the number and size of new vessels built, vessels scrapped, converted and lost, the number of vessels that are out of service, and regulations that may effectively cause early obsolescence of tonnage. The demand for tanker capacity is influenced by, among other factors:

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· global and regional economic and political conditions;

· increases and decreases in production of and demand for crude oil and petroleum products;

· increases and decreases in OPEC oil production quotas;

· the distance crude oil and petroleum products need to be transported by sea; and

· developments in international trade and changes in seaborne and other transportation patterns.

Tanker rates also fluctuate based on seasonal variations in demand. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the summer months. In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to disrupt vessel routing and scheduling. The oil price volatility resulting from these factors has historically led to increased oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.

Our general and administrative expenses were affected by the commercial management and administrative services agreements we entered into in December 2009 with SCM and Liberty Holding Company Ltd., respectively, and costs incurred from being a public company. SCM and Liberty, companies controlled by the Lolli-Ghetti family of which our founder, Chairman and Chief Executive Officer is a member, provide commercial and administrative management services to us, respectively. In December 2009, we entered into a commercial management agreement with SCM and an administrative services agreement with Liberty. On March 13, 2012, Liberty assigned its interests and obligations in the administrative services agreement to SSH, a company controlled by the Lolli-Ghetti family. The effective date of the novation was November 9, 2009, the date that we first entered into the agreement with Liberty. We pay fees under our commercial management agreement, which are identical to what SCM charges to its pool participants, including third-party owned vessels. We reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. We also pay our Administrator a fee for arranging vessel purchases and sales for us equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. We believe this 1% fee on purchases and sales is customary in the tanker industry. In addition, we continue to incur general and administrative expenses related to our being a publicly traded company, including, among other things, costs associated with reports to shareholders, filings with the U.S. Securities Exchange Commission, investor relations, New York Stock Exchange fees and tax compliance expenses.

RESULTS OF OPERATIONS

The following tables separately present our operating results for the years ended December 31, 2011, 2010 and 2009.

RESULTS OF OPERATIONS FOR THE Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010

	For the Year Ended
	December 31,									Percentage
	2011			2010			Change			Change
Vessel revenue	$	82,109,691		$	38,797,913		$	43,311,778			112	%
Vessel operating costs		(31,369,646	)		(18,440,492	)		(12,929,154	)		(70	%)
Voyage expenses		(6,881,019	)		(2,542,298	)		(4,338,721	)		(171	%)
Charterhire		(22,750,257	)		(275,532	)		(22,474,725	)		(8157	%)
Impairment		(66,610,544	)		—			(66,610,544	)		N/A
Depreciation		(18,460,117	)		(10,178,908	)		(8,281,209	)		(81	%)
General and administrative expenses		(11,636,713	)		(6,200,094	)		(5,436,619	)		(88	%)
Financial expenses		(7,060,027	)		(3,230,895	)		(3,829,132	)		(119	%)
Realized loss on derivative financial instruments		—			(279,560	)		279,560			N/A
Financial income		51,008			36,534			14,474			40	%
Other expense, net		(118,968	)		(508,766	)		389,798			77	%
Net loss		(82,726,592	)		(2,822,098	)		(79,904,495	)		2831	%

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Net Loss. For the year ended December 31, 2011, we incurred a net loss of $82.7 million, compared to a net loss of $2.8 million for the year ended December 31, 2010. The differences between the two periods are discussed below.

Vessel revenue. Vessel revenue was $82.1 million for the year ended December 31, 2011, an increase of $43.3 million, or 112%, from vessel revenue of $38.8 million for the year ended December 31, 2010. The following table summarizes our revenue:

	For the year
	Ended December 31,							Percentage
	2011		2010		Change			Change
Owned vessels
Time charter revenue	$	9,626,401	$	19,417,128	$	(9,790,727	)		(50	%)
Pool revenue		39,521,617		15,179,603		24,342,013			160	%
Voyage revenue		12,286,812		3,916,529		8,370,283			214	%
Time chartered-in vessels
Pool revenue		20,674,861		284,653		20,390,208			7163	%
TOTAL	$	82,109,691	$	38,797,913	$	43,311,778			112	%

The decrease in time charter revenue of $9.8 million, or 50%, was the result of a decrease in the overall number of days of vessels on time charter to 427 in 2011 compared to 854 in 2010. This decrease was the result of the expiration of time charter contracts on the Senatore (expired August 2010), STI Harmony (expired September 2010), and STI Heritage (expired November 2010). Noemi was employed on a time charter for both periods that began in 2007 and expired in December 2011, and STI Spirit was employed on a short term time charter for 72 days during 2011.

The increase in pool revenue for owned vessels of $24.3 million, or 160%, was primarily the result of an increase in the number of pool revenue days to 3,149 in 2011 from 1,185 in 2010. This increase was attributable to growth of the fleet as our average number of owned vessels was 11.29 for the year ended December 31, 2011, compared to 6.19 for the year ended December 31, 2010.

The increase in voyage revenue of $8.4 million, or 214%, is a result of an increase in the number of days that our vessels operated in the spot market to 450 days in 2011 compared to 177 in 2010, in addition to an increase in TCE to $12,092 per day in 2011 from $7,774 per day in 2010. During 2011, the STI Coral and STI Diamond operated in the spot market for 450 days combined. During 2010, our newly purchased vessels, STI Conqueror, STI Gladiator, STI Matador and STI Highlander operated in the spot market prior to their entry in the Scorpio Handymax Tanker Pool for 167 days. Additionally, the Senatore operated in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

The increase of pool revenue for time chartered-in vessels of $20.3 million, or 7,163%, in 2011 compared to 2010 was due to an increase in the number of pool revenue days for time chartered-in vessels. In 2011, the BW Zambesi, Krisjanis Valdemars, Kraslava, Kazdanga, Histria Azure, Histria Perla, Histria Coral and Khawr Aladid were time chartered-in for 1,806 days, while in 2010, the BW Zambesi was time chartered-in for 20 days. All vessels operated in the Scorpio Group Pools.

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Vessel operating costs. Vessel operating costs for owned vessels of $31.4 million for the year ended December 31, 2011, increased $12.9 million, or 70% from $18.4 million for the year ended December 31, 2010. The increase is the result of an additional 1,863 operating days in 2011 which was driven by the purchase of two vessels in 2011 and seven vessels throughout 2010, which operated for a full year in 2011 as opposed to partial years in 2010.

Voyage expenses. The increase in voyage expenses is a result of an increase in the number of days that our vessels operated in the spot market to 450 in 2011 from 177 in 2010. During 2011, the STI Coral and STI Diamond operated in the spot market for 450 days combined. During 2010, our newly purchased vessels, STI Conqueror, STI Gladiator, STI Matador and STI Highlander operated in the spot market for 167 days prior to their entry in the Scorpio Handymax Tanker Pool. Additionally, the Senatore operated in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

Charterhire. Charterhire expense of $22.8 million for the year ended December 31, 2011 increased $22.5 million, or 8,157%, from $0.3million for the year ended December 31, 2010. The increase was due to an increase of the number of time chartered-in days in 2011. In 2011, the BW Zambesi, Krisjanis Valdemars, Kraslava, Kazdanga, Histria Azure, Histria Perla, Histria Coral and Khawr Aladid were time chartered-in for 1,806 days, while in 2010, the BW Zambesi was time chartered-in for 20 days.

Impairment. In the year ended December 31, 2011, we recognized an impairment loss of $66.6 million for our 12 owned vessels. This impairment loss was triggered by reductions in vessel values, and represented the difference between the carrying value and recoverable amount, being fair value less cost to sell. In determining the fair value less cost to sell, we took into consideration the estimated valuations provided by independent ship brokers. No impairments were recognized in the year ended December 31, 2010.

Impairment methodology

The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of constructing new vessels.  At each reporting period end date, we review the carrying amounts of our vessels to determine whether there is any indication that those vessels may have suffered an impairment loss. In this regard, fluctuations in market values below carrying values are considered to represent an impairment triggering event that necessitates performance of a full impairment review.

Impairment losses are calculated as the excess of a vessel’s carrying amount over its recoverable amount. Under IFRS, the recoverable amount is the higher of an asset’s (i) fair value less costs to sell and (ii) value in use. Fair value less costs to sell is defined by IFRS as “the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal”. When we calculate value in use, we discount the expected future cash flows to be generated by our vessels to their net present value.

Our impairment evaluation is performed on an individual vessel basis twice each year. First, we assess the fair value less the cost to sell our vessels taking into consideration vessel valuations from leading, independent and internationally recognized ship brokers. We then compare that estimate of market values (less an estimate of selling costs) to each vessel’s carrying value and, if the carrying value exceeds the vessel’s market value, an indicator of impairment exists. The indicator of impairment prompts us to perform a calculation of the potentially impaired vessel’s value in use, in order to appropriately determine the ‘higher of’ the two values.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. In developing estimates of future cash flows, we make assumptions about future charter rates, vessel operating expenses, the estimated remaining useful lives of the vessels and the discount rate. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Reasonable changes in the assumptions for the discount rate or future charter rates could lead to a value in use for some of our vessels that is equal to or less than the carrying amount for such vessels. All of the aforementioned assumptions have been highly volatile in both the current market and historically. Given the current and historical volatility in market prices for similar vessels and recent downward pressure on charter rates, the fair value less estimated costs to sell in the current year reflected potential indicators of impairment for all of our owned vessels.

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For the year ended December 31, 2011, we performed an assessment as described above. At that date, the carrying amounts of our vessels were greater than the basic, meaning charter free, market value for all of our owned vessels. In line with our policy we performed a value in use calculation where we estimated each vessels’ future cash flows based on a combination of the latest forecast time charter rates for the next three years (obtained from a third party service provider), a growth rate in freight rates for each period which is based on management’s long-term view of the market, and our best estimate of vessel operating expenses and drydock costs.. These cash flows were then discounted to their present value, using a discount rate based on our current borrowing rates adjusted for certain credit risks. The value in use calculations for all vessels were less than both the fair value less estimated costs to sell and carrying amounts of the vessels. As a result of this testing, we recorded an impairment loss of $66.6 million to adjust the carrying amounts of our vessels to reflect fair value less estimated costs to sell.

Illustrative comparison of excess of carrying amounts over estimated charter-free market value of certain vessels

During the past few years, the market values of vessels have experienced particular volatility, with substantial declines in many vessel classes. As a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below the carrying amounts of those vessels. After undergoing this analysis at December 31, 2011, we concluded that the recoverable amount of each of our vessels was lower than their carrying values and consequently, an impairment loss was required for each of our 12 owned vessels.

The table set forth below indicates the carrying amount of each of our vessels as of December 31, 2011.

Our estimate of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, including:

· reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;

· news and industry reports of similar vessel sales;

· news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;

· approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;

· offers that we may have received from potential purchasers of our vessels; and

· vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

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As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values and revenues are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.

	Vessel Name	Year Built	Carrying Value (in $ millions)*
1	STI Highlander	2007	$              24.4
2	STI Gladiator	2003	17.8
3	STI Matador	2003	18.3
4	STI Conqueror	2005	20.5
5	STI Coral	2008	28.3
6	STI Diamond	2008	28.3
7	Noemi	2004	28.4
8	Senatore	2004	28.4
9	STI Harmony	2007	35.3
10	STI Heritage	2008	35.9
11	Venice	2001	19.1
12	STI Spirit	2008	37.7
	Total		$             322.5

* Given that each of our vessels was impaired at December 31, 2011 based on fair value less cost to sell, the carrying amounts noted above are representative of fair value less estimated costs to sell as of December 31, 2011.

We refer you to the risk factor entitled “The market values of our vessels may decrease, which could cause us to breach covenants in our credit facilities and adversely affect our operating results.” and the discussion herein under the heading “Risks Related To Our Industry”

Depreciation. Depreciation of $18.5 million for the year ended December 31, 2011 increased $8.3 million, or 81%, from $10.2 million for the year ended December 31, 2010. The increase in depreciation expense was primarily due to an increase in our average number of owned vessels to 11.29 in 2011 from 6.19 in 2010. This increase was offset by a change in the depreciable life of our owned vessels from 20 to 25 years in the second quarter 2010. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. This change in estimate was applied prospectively and the impact on the income statement for the year ended December 31, 2010 resulted in a decrease in depreciation expense and increase in net income of $1.2 million. This change will result in a decrease in depreciation expense (after considering the effect of the impairment noted above) of approximately $1.2 million for each year prospectively until the 20 year anniversary date of the vessels impacted by this change. See discussion of this change in estimate in Note 1 to the audited consolidated financial statements included in “ITEM 18 Financial Statements”.

General and administrative expense. General and administrative expense, which includes commercial management and administrative fees, of $11.6 million for the year ended December 31, 2011, increased $5.4 million, or 88%, from $6.2 million for the year ended December 31, 2010. The increase is a result of incremental costs incurred to operate as a public company and additional compensation arrangements that were entered into as part of the initial public offering in April 2010. This was specifically driven by an increase in the amortization of restricted stock issued in June 2010 and January 2011, a full year of salary costs, directors and officers insurance and fees, legal fees, audit fees and other related expenses.

Financial expenses. Financial expenses of $7.1 million for the year ended December 31, 2011, increased $3.8 million, or 119%, from $3.2 million for the year ended December 31, 2010. Financial expenses for the year ended December 31, 2011 consisted of interest on bank loans ($5.0 million), commitment fees on undrawn portions of the Company’s 2010 and 2011 Credit Facilities ($1.1 million ) and amortization of deferred financing fees ($1.0 million). Financial expenses for the year ended December 31, 2010 consisted of interest on bank loan ($2.4 million), which at the time only consisted of the 2010 Revolving Credit Facility, commitment fees on undrawn portions of the Company’s 2010 Revolving Credit Facility ($0.6 million) and amortization of deferred financing fees ($0.2 million). See the discussion in Long-Term Debt Obligations and Credit Arrangements below for details surrounding changes in the Company’s bank loans throughout 2011 which affected the components of financial expenses.

Realized loss on derivative financial instruments. Realized loss on derivatives from our interest rate swap, was $0.3 million for the year ended December 31, 2010. The realized loss is the result of the settlement difference between contracted interest rates and the actual market interest rates (LIBOR). The interest rate swap, which was related to the 2005 Credit Facility and did not qualify for hedge accounting, was terminated on April 9, 2010.

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Financial income. Interest income was $51,008 for the year ended December 31, 2011, an increase of $14,474 or 40% from the $36,534 for the year ended December 31, 2010. The increase was primarily due to an increase in our average cash balance during the period.

Other expenses, net. Other expense, net was a loss of $118,968 for the year ended December 31, 2011, and a loss of $508,766 for the year ended December 31, 2010. The decrease was primarily driven by expenses incurred for the initial public offering in April 2010.

Results of operations – segment analysis

Aframax/LR2 segment

The following table summarizes vessel operations for our Aframax segment.

	For the year
Aframax/LR2 segment	Ended December 31									Percentage
	2011			2010			Change			Change
Vessel revenue	$	6,484,272		$	641,278		$	5,842,994			911	%
Vessel operating costs		(2,547,436	)		(426,788	)		(2,120,648	)		497	%
Charterhire		(838,793	)		—			(838,793	)		N/A
Impairment		(12,458,512	)		—			(12,458,512	)		N/A
Depreciation		(2,074,352	)		(293,211	)		(1,781,141	)		607	%
General and administrative expenses		(135,589	)		(14,747	)		(120,842	)		819	%
Financial expenses		(841,066	)		778			(841,844	)		(108,206	%)
Other expense, net		(133,547	)		—			(133,547	)		N/A
Segment loss	$	(12,545,024	)	$	(92,690	)		(12,452,334	)		13434	%
Time charter revenue per day		15,457			—			15,457			N/A
Pool revenue per day		14,849			12,460			2,389			19	%
Operating costs per day		6,960			8,293			(1,342	)		(16	%)
Time charter revenue days		72			—			72			N/A
Pool revenue days		361			51			310			602	%
Operating days		365			51			314			609	%
Average number of owned vessels		1.00			0.14			0.86			609	%
Average number of time chartered-in vessels		0.19			—			0.19			N/A

On November 2010, we took delivery of the STI Spirit, a 113,091 dwt Aframax/LR2 product tanker. From delivery on November 10, 2010 through January 11, 2011, the STI Spirit operated in the Scorpio Aframax Tanker Pool, which traded a mix of crude and product tankers. As of March 25, 2011, this vessel joined the Scorpio LR2 Pool, which focuses solely on product tankers.

Vessel Revenue. Vessel revenue of $6.5 million for the year ended December 31, 2011, increased $5.8 million, or 911%, as the result of an increase in the overall number of total revenue days to 434 days in 2011 from 51 days in 2010. This was driven by the acquisition of the STI Spirit. Additionally, we took delivery of the Khawr Aladid, a 2006 built LR2 product tanker (106,003 DWT), on October 24, 2011, on a six month time charter-in agreement.

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Vessel operating costs. Vessel operating costs of $2.5 million for the year ended December 31, 2011, increased $2.1 million or 497% as a result of an increase in the number of operating days to 365 in 2011 from 51 in 2010 which was driven by the purchase of the STI Spirit in November 2010.

Charterhire. Charterhire expense of $0.9 million for the year ended December 31, 2011 was driven by the delivery of the Khawr Aladid, a 2006 built LR2 product tanker (106,003 DWT), on October 24, 2011, on a six month time charter-in agreement. There were no time chartered-in vessels in the Aframax/LR2 segment in 2010.

Impairment. In the year ended December 31, 2011, we recognized an impairment loss of $12.5 million for the Aframax/LR2 segment. No impairment was recognized in 2010.

Depreciation. Depreciation and amortization expense of $2.1 million for the year ended December 31, 2011 increased $1.8 million, or 607%, from $0.3 million for the year ended December 31, 2010. The increase is due to an increase in the number of operating days to 365 in 2011 from 51 in 2010 which was driven by the purchase of the STI Spirit in November 2010.

General and administrative expense. General and administrative expense of $0.1 million for the year ended December 31, 2011, increased $0.1 million or 819% from $14,747 for the year ended December 31, 2010. General and administrative expenses for the Aframax/LR2 segment primarily consist of commercial management fees and administrative fees to SCM. The increase is due to an increase in the number of revenue days to 434 in 2011 from 51 in 2010 which was driven by the purchase of the STI Spirit in November 2010 and delivery of the Khawr Aladid in October 2011. These fees are described in Note 15 to the audited consolidated financial statements in “ITEM 18 Financial Statements”.

Financial expenses. Financial expenses was $0.8 million for the year ended December 31, 2011, an increase of approximately $0.8 million or 108,206% from $778 for year ended December 31, 2010. Financial expenses for the Aframax/LR2 segment represents interest for the STI Spirit Credit Facility which was signed and drawn in March 2011.

Other expense, net. Other expense, net was a loss of $133,547 for the year ended December 31, 2011. There were no other expenses for the year ended December 31, 2010. This increase is primarily due to the write-off of vessel purchase options that were acquired as part of the purchase of the STI Spirit in November 2010 and expired unexercised in September 2011.

Panamax/LR1 segment

The following table summarizes vessel operations for our Panamax segment

	For the year
Panamax/LR1 segment	Ended December 31									Percentage
	2011			2010			Change			Change
Vessel revenue	$	31,100,705		$	29,344,505		$	1,756,200			6	%
Vessel operating costs		(14,427,452	)		(12,363,968	)		(2,063,485	)		17	%
Voyage expenses		(13,383	)		(253,106	)		239,723			(95	%)
Charterhire		(4,553,829	)		(275,532	)		(4,278,297	)		1553	%
Impairment		(28,616,341	)		—			(28,616,341	)		N/A
Depreciation		(9,279,150	)		(7,493,632	)		(1,785,518	)		24	%
General and administrative expenses		(691,943	)		(600,476	)		(91,467	)		15	%
Financial expenses		420			(133,708	)		134,128			(100	%)
Realized loss on derivative financial instruments		—			(279,560	)		279,560			N/A
Other expense, net		22,802			(4,420	)		27,222			(616	%)
Segment (loss)/profit	$	(26,458,171	)	$	7,940,103			(34,398,275	)		(433	%)
Time charter revenue per day		23,962			22,363			1,599			7	%
Pool revenue per day		12,876			15,560			(2,684	)		(17	%)
Voyage revenue per day		—			2,839			(2,839	)		N/A
Operating costs per day		7,891			8,189			(330	)		(4	%)
Time charter revenue days		355			868			(513	)		(59	%)
Pool revenue days		1,754			620			1,134			183	%
Voyage revenue days		—			10			(10	)		N/A
Operating days		1,825			1,510			315			21	%
Average number of owned vessels		5.00			4.14			0.86			21	%
Average number of time chartered-in vessels		0.91			0.05			0.86			1565	%

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Vessel Revenue. Vessel revenue for the year ended December 31, 2011 was $31.1 million, an increase of $1.8 million, or 6% from $29.3 million for the year ended December 31, 2010. The increase in revenue was the result of an increase in the overall number of total revenue days to 2,109 days in 2011 from 1,498 days in 2010. This was driven by an increase in pool days of 1,134 offset by a decrease in time charter days of 513. The STI Harmony and STI Heritage were acquired in June 2010 with existing time charter contracts that expired in September and December 2010, respectively. These, along with the time charter contracts with the Noemi and Senatore comprised the time charter revenue for 2010. The time charter contract for the Senatore expired in August 2010. The time charter arrangement for the Noemi expired in December 2011 and was the only vessel in this segment on time charter during 2011. All of these vessels entered the Scorpio Panamax Tanker Pool subsequent to the expiration of the time charters.

As such, in 2011, five of our owned vessels and one of our time chartered-in vessels operated in the Scorpio Panamax Tanker Pool. In 2010, four of our owned vessels and one of our time chartered-in vessels operated in the Scorpio Panamax Tanker Pool. The increase was offset by an overall decrease in daily TCE rates to $12,876 per day in 2011, from $15,560 per day in 2010.

Vessel operating costs. Vessel operating costs of $14.4 million increased $2.1 million or 17%, as a result of an increase in the number of operating days to 1,825 in 2011 from 1,510 in 2010, which was driven by the purchase of the STI Harmony and STI Heritage in June 2010 and therefore a full year of usage in 2011.

Voyage expenses. Voyage expenses of $13,383 decreased $0.2 million or 95% as a result of the Senatore operating in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

Charterhire. Charterhire expense of $4.5 million for the year ended December 31, 2011 decreased $4.2 million or 1,553% from $0.3 million for the year ended December 31, 2010. The increase was due to the BW Zambesi which was chartered-in for a total of 333 days in 2011 and 20 days in 2010 at a charterhire rate of $13,850 per day.

Impairment. In the year ended December 31, 2011, we recognized an impairment loss of $28.6 million for our owned Panamax/LR1 vessels. No impairment was recognized in 2010.

Depreciation. Depreciation expense of $9.3 million for the year ended December 31, 2011, increased by $1.8 million, or 24% from $7.5 million for the year ended December 31, 2010. The increase in depreciation expense was primarily due to an increase in our average number of owned vessels to 5.00 in 2011 from 4.14 in 2010. This increase was offset by the effect from a change in the depreciable life of our owned vessels from 20 to 25 years, which occurred in the second quarter of 2010, together with the effect of an increase in estimated residual values of our vessels. See discussion of these changes in Note 1 to the audited consolidated financial statements included in “ITEM 18 Financial Statements.”

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General and administrative expense. General and administrative expense of $0.7 million for the year ended December 31, 2011, increased $0.1 million, or 15% from $0.6 million for the year ended December 31, 2010. General and administrative expenses for the Panamax/LR1 segment primarily consist of commercial management fees and administrative fees to SCM. The increase is the result of an increase in the average number of owned vessels to 5.00 in 2011 to 4.14 in 2010. These fees are described in Note 15 to the audited consolidated financial statements in “ITEM 18 Financial Statements”.

Financial expenses. Financial expenses were $0.2 million for the year ended December 31, 2010. Financial expenses for the Panamax/LR1 segment represent interest for the 2005 Credit Facility which was repaid in April 2010.

Realized loss on derivative financial instruments. Realized loss on derivative financial instruments was $0.3 million for the year ended December 31, 2010. The realized loss is the result of the settlement difference between contracted interest rates and the actual market interest rates (LIBOR) on an interest rate swap that was related to the 2005 Credit Facility, and was terminated on April 9, 2010.

MR Segment

The following table summarizes vessel operations for our MR segment. On May 10, 2011, we took delivery of STI Coral and STI Diamond and we did not have vessels operating in this segment in prior periods. As such, no further commentary has been provided in respect of this segment as a year-on-year comparison is not applicable.

	For the year
MR segment	Ended December 31
	2011
Vessel revenue	$	12,286,812
Vessel operating costs		(3,178,352	)
Voyage expenses		(6,841,876	)
Impairment		(12,573,388	)
Depreciation		(2,038,214	)
General and administrative expenses		(313,782	)
Segment loss	$	(12,658,800	)
Voyage revenue per day		12,092
Operating costs per day		6,748
Voyage revenue days		450
Operating days		471
Average number of owned vessels		1.29

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Handymax segment

The following table summarizes vessel operations for our Handymax segment

	For the year
Handymax segment	Ended December 31									Percentage
	2011			2010			Change			Change
Vessel revenue	$	32,237,902		$	8,812,130		$	23,425,771			266	%
Vessel operating costs		(11,216,406	)		(5,649,736	)		(5,566,669	)		99	%
Voyage expenses		(25,760	)		(2,289,192	)		2,263,432			(99	%)
Charterhire		(17,357,635	)		—			(17,357,635	)		N/A
Impairment		(12,962,303	)		—			(12,962,303	)		N/A
Depreciation		(5,068,401	)		(2,389,669	)		(2,678,733	)		112	%
General and administrative expenses		(762,083	)		(266,509	)		(495,572	)		186	%
Financial expenses		—			1,383			(1,383	)		N/A
Segment loss	$	(15,154,686	)	$	(1,781,593	)		(13,373,091	)		751	%
Pool revenue per day		11,343			9,965			1,379			14	%
Voyage revenue per day		—			8,077			(8,077	)		N/A
Operating costs per day		7,619			8,107			(495	)		(6	%)
Pool revenue days		2,840			520			2,320			1238	%
Voyage revenue days		—			167			(167	)		N/A
Operating days		1,460			697			763			262	%
Average number of owned vessels		4.00			1.91			2.09			260	%
Average number of time chartered-in vessels		3.85			—			3.85			N/A

Vessel Revenue. Vessel revenue for the year ended December 31, 2011 was $32.2 million, an increase of $23.4 million, or 266% from $8.8 million for the year ended December 31, 2010. This increase was the result of an increase in the overall number of total revenue days to 2,840 days in 2011 from 687 days in 2010. The STI Conqueror was delivered in June 2010, the STI Matador and STI Gladiator were delivered in July 2010 and the STI Highlander was delivered in August 2010. These were the only vessels in the Handymax segment during the year ended December 31, 2010. We time chartered-in Krisjanis Valdemars, Kraslava, Histria Azure, Kazdanga, Histria Perla and Histria Coral during the year ended December 31, 2011. In addition, pool revenue per day increased 14% for the year ended December 31, 2011 when compared to the year ended December 31, 2010.

Vessel operating costs. Vessel operating costs for the year ended December 31, 2011 were $11.2 million, an increase of $5.6 million, or 99% from the year ended December 31, 2010. This as a result of an increase in the number of operating days to 1,460 from 697 for the years ended December 31, 2011 and 2010, respectively which was driven by the purchase of the STI Conqueror in June 2010, the STI Gladiator and STI Matador in July 2010 and STI Highlander in August 2010, all of which operated for a full year during 2011.

Voyage expenses. Voyage expenses for the year ended December 31, 2011 were $25,760, a decrease of $2.3 million, or 99% as a result of the STI Conqueror, STI Gladiator, STI Matador and STI Highlander operating in the spot market for 169 days in during the year ended December 31, 2010. No vessels operated in the spot market during the year ended December 31, 2011 though certain nominal voyage charges were incurred.

Charterhire. Charterhire for the year ended December 31, 2011 was $17.4 million, an increase of $17.4 million from the year ended December 31, 2010. The increase was the result of the chartering-in of Krisjanis Valdemars, Kraslava, Histria Azure, Kazdanga, Histria Perla and Histria Coral during the year ended December 31, 2011. There were no vessels chartered-in during the year ended December 31, 2010.

Impairment. In the year ended December 31, 2011, we recognized an impairment loss of $13.0 million for our owned Handymax. No impairment was recognized in 2010.

Depreciation. Depreciation expense for the year ended December 31, 2011 was $5.0 million, an increase of $2.7 million, or 112% from the year ended December 31, 2010. This increase is a result of an increase in our average number of owned Handymax vessels to 4.00 from 1.91 for the years ended December 31, 2011and 2010, respectively.

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General and administrative expense. General and administrative expense for the year ended December 31, 2011 was $0.8 million, an increase of $0.5 million, or 186%, from the year ended December 31, 2010. General and administrative expenses for the Handymax segment primarily consists of commercial management fees and administrative fees to SCM. The increase is the result of an increase in the average number of owned and time chartered-in vessels to 7.85 from 1.91 for the years ended December 31, 2011 and 2010, respectively.

RESULTS OF OPERATIONS FOR THE Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

	For the year
	Ended December 31,									Percentage
	2010			2009			Change			Change
Vessel revenue	$	38,797,913		$	27,619,041		$	11,178,872			40	%
Vessel operating costs		(18,440,492	)		(8,562,118	)		(9,878,374	)		115	%
Voyage expenses		(2,542,298	)		—			(2,542,298	)		100	%
Charterhire		(275,532	)		(3,072,916	)		2,797,384			(91	%)
Impairment		—			(4,511,877	)		4,511,877			N/A
Depreciation		(10,178,908	)		(6,834,742	)		(3,344,166	)		49	%
General and administrative expenses		(6,200,094	)		(416,908	)		(5,783,186	)		1387	%
Financial expenses		(3,230,895	)		(699,115	)		(2,531,780	)		362	%
Net realized and unrealized (loss)/gain on derivative financial instruments		(279,560	)		148,035			(427,595	)		(289	%)
Financial income		36,534			4,929			31,605			641	%
Other expenses, net		(508,766	)		(256,292	)		(252,474	)		99	%
Net (loss)/income	$	(2,822,098	)	$	3,418,037		$	(6,240,135	)		(183	%)

Net Loss/income. For the year ended December 31, 2010, we incurred a net loss of $2.8 million, compared to net income of $3.4 million for the year ended December 31, 2009. The differences between the two periods are discussed below.

Vessel revenue. Vessel revenue was $38.8 million for the year ended December 31, 2010, an increase of $11.2 million, or 40%, from vessel revenue of $27.6 million for the year ended December 31, 2009. The following table summarizes our revenue:

	For the year
	Ended December 31,
	2010		2009		Change			% change
Owned vessels
Time charter revenue	$	19,417,128	$	17,203,709	$	2,213,419			13	%
Pool revenue		15,179,603		7,438,726		7,740,877			104	%
Voyage revenue		3,916,529		—		3,916,529			N/A
Time chartered-in vessels
Pool revenue		284,653		2,976,606		(2,691,953	)		(90	%)
TOTAL	$	38,797,913	$	27,619,041	$	11,178,872			40	%

The increase in time charter revenue of $2.2 million, or 13%, was the result of an increase in the overall number of days of vessels on time charter from 693 in 2009 to 854 in 2010. This increase was driven by the acquisition of the STI Harmony and STI Heritage in June 2010, which were acquired with existing time charter contracts that expired in September and December 2010, respectively. These contracts, along with the time charter contracts for Noemi and Senatore comprised the time charter revenue for 2010. The Noemi and Senatore, which were under time charter arrangements beginning in 2007, comprised the time charter revenue for 2009. The time charter contract for the Senatore expired in August 2010 and the time charter contract for the Noemi is scheduled to expire in December 2011. This increase was offset by a decrease in the daily TCE rates from $24,824 per day in 2009 to $22,729 in 2010.

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The increase in pool revenue of $7.7 million, or 104%, was due to an increase in the number of days that vessels were employed in the pools from 486 in 2009 to 1,205 in 2010. In 2009 the Venice and Noemi (which was under a time charter in arrangement until May 2009) were the only vessels operating in the pool (Scorpio Panamax Tanker Pool). In 2010, nine of our owned vessels and one of our time chartered-in vessels operated in either the Scorpio Aframax, Scorpio Panamax or Scorpio Handymax tanker pools. This increase was offset by an overall decrease in daily TCE rates from $21,425 per day in 2009, to $12,833 per day in 2010.

The increase in voyage revenue is a result of an increase in the number of days that our vessels operated in the spot market from 0 in 2009 to 177 in 2010. During 2010, our newly purchased vessels, STI Conqueror, STI Gladiator, STI Matador and STI Highlander operated in the spot market prior to their entry in the Scorpio Handymax Tanker Pool for 167 days. Additionally, the Senatore operated in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

The reduction of pool revenue for time chartered-in vessels of $2.7 million, or 90%, was due to a reduction of time chartered-in operating days from 121 in 2009 to 20 in 2010. In 2009, the Noemi was time chartered-in for 121 days, while in 2010, the BW Zambesi was time chartered in for 20 days. Both vessels operated in the Scorpio Panamax Tanker Pool.

Vessel operating costs. Vessel operating costs for owned vessels of $18.4 million for the year ended December 31, 2010, increased $9.9 million, or 115%, from $8.6 million for the year ended December 31, 2009. The increase is the result of an additional 1,163 operating days in 2010 which was driven by the purchase of seven additional vessels in 2010.

Voyage expenses. The increase in voyage expenses is a result of an increase in the number of days that our vessels operated in the spot market from 0 in 2009 to 177 in 2010. During 2010, our newly purchased vessels, STI Conqueror, STI Gladiator, STI Matador and STI Highlander operated in the spot market for 167 days prior to their entry in the Scorpio Handymax Tanker Pool. Additionally, the Senatore operated in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

Charterhire. Charterhire of $0.3 million for the year ended December 31, 2010 decreased $2.8 million, or 91%, from $3.1 million for the year ended December 31, 2009. The decrease was due to 101 less operating days in the year ended December 31, 2010 and a reduction in the charter-hire rate we paid on our time chartered-in vessels in 2010 compared to 2009. The BW Zambesi was chartered in for a total of 20 days in 2010 at a charter-hire rate of $13,850 per day.The Noemi was chartered-in by us for 121 days in 2009 at a charter-hire rate of $26,750 per day plus a 50% profit and loss arrangement where we agreed to pay 50% of the vessel’s earnings in the pool above the daily charter-hire rate, and we would receive 50% of the vessels earnings in the pool below $26,750 per day. For year ended December 31, 2009, we recorded a reduction in the charterhire expense of $108,000 because the vessel’s earnings in the pool were less than $26,750 per day.

Impairment. In the year ended December 31, 2009, we recognized an impairment loss of $4.5 million for Noemi and Senatore. This impairment loss was triggered by reductions in vessel values, and represented the difference between the carrying value and recoverable amount, being fair value less cost to sell. We determined the fair value of each vessel by adding (i) the charter free market value of the vessel to (ii) the discounted value of each vessel’s time charter, which is the difference between each vessel’s time charter contracted rate and the market rate for a similar type of vessel with a similar contracted duration. In determining the charter free market value, we took into consideration the estimated valuations provided by an independent ship broker. No impairments were recognized in the year ended December 31, 2010.

Depreciation. Depreciation of $10.2 million for the year ended December 31, 2010 increased $3.3 million, or 49%, from $6.8 million for the year ended December 31, 2009. The increase in depreciation expense was primarily due to an increase in our average number of owned vessels from 3.00 in 2009 to 6.19 in 2010. This increase was offset by a change in the depreciable life of our owned vessels from 20 to 25 years in the second quarter 2010. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. This change in estimate was applied prospectively and the impact on the income statement for the year ended December 31, 2010 resulted in a decrease in depreciation expense and increase in net income of $1.2 million. This change will result in a decrease in depreciation expense of approximately $1.6 million for each year prospectively until the 20 year anniversary date of the vessels impacted by this change. It was also offset by an increase in the estimated residual value due to changes in scrap rates since December 31, 2009. This change resulted in a decrease in depreciation expense of $0.4 million in the year ended December 31, 2010, as compared to the depreciation which would have been recorded using the estimated residual values prevailing at December 31, 2009. See discussion of this change in estimate in Note 1 to the audited consolidated financial statements included in “ITEM 18 Financial Statements”.

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General and administrative expense. General and administrative expense, which includes the commercial management and administrative fees, of $6.2 million for the year ended December 31, 2010, increased $5.8 million, or 1,387%, from $0.4 million for the year ended December 31, 2009. This increase is a result of incremental costs incurred to operate as a public company. Specifically, general and administrative expenses in 2010 were comprised of salaries of $2.4 million, restricted stock amortization of $1.0 million, legal and professional fees of $0.9 million, commercial management fees of $0.9 million, directors’ and officers’ insurance and fees of $0.6 million and other related expenses. General and administrative expenses in 2009 were comprised of commercial management fees of $0.3 million and other related expenses.

Financial expenses. Financial expenses were $3.2 million for the year ended December 31, 2010, an increase of $2.5 million or 362% from $0.7 million for year ended December 31, 2009. The year ended December 31, 2010 included interest expense of $2.6 million on the 2010 Revolving Credit Facility and 2005 Credit Facility in addition to $0.5 million of lender commitment fees on the undrawn portion of the 2010 Revolving Credit Facility and $0.1 million of other finance charges. The year ended December 31, 2009 included interest expense on the 2005 Credit Facility.

Net realized/unrealized (loss) on derivative financial instruments. Gain/(loss) on derivatives from our interest rate swap, which consists of realized and unrealized gains and losses, was a realized loss of $0.3 million for the year ended December 31, 2010. For the year ended December 31, 2009, there was an unrealized gain of $1.0 million offset by a realized loss of $0.8 million. The unrealized gains and losses reflect the adjustment of the market value of the swap (the contract rate versus the current market rate). The realized loss is the result of the settlement difference between contracted interest rates and the actual market interest rates (LIBOR). The interest rate swap, which was related to the 2005 Credit Facility was terminated on April 9, 2010.

Financial income. Financial income was $36,534 for the year ended December 31, 2010, an increase of $31,605 or 641% from the $4,929 for the year ended December 31, 2009. The increase was primarily due to an increase in our cash balance during the period.

Other expense, net. Other expense, net was a loss of $508,766 for the year ended December 31, 2010, and a net loss of $256,292 for the year ended December 31, 2009. The increase was primarily driven by expenses incurred for the initial public offering in April 2010.

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Results of operations – segment analysis

Panamax/LR1 segment

The following table summarizes vessel operations for our Panamax segment

	For the year
Panamax/LR1 segment	Ended December 31,									Percentage
	2010			2009			Change			Change
Vessel revenue	$	29,344,505		$	27,619,041		$	1,725,464			6	%
Vessel operating costs		(12,363,968	)		(8,562,118	)		3,801,850			44	%
Voyage expenses		(253,106	)		—			253,106			N/A
Charterhire		(275,532	)		(3,072,916	)		(2,797,384	)		(91	%)
Impairment		—			(4,511,877	)		(4,511,877	)		(100	%)
Depreciation		(7,493,632	)		(6,834,742	)		658,890			10	%
General and administrative expenses		(600,476	)		(416,908	)		183,568			44	%
Financial expenses		(133,708	)		(694,186	)		(560,478	)		(81	%)
Realized and unrealized (loss)/gain on derivative financial instruments		(279,560	)		148,035			427,595			(289	%)
Other expenses, net		(4,420	)		(256,292	)		(251,872	)		(98	%)
Segment profit	$	7,940,103		$	3,418,037			4,522,066			132	%
Time charter revenue per day		22,729			24,824			(2,095	)		(8	%)
Pool revenue per day		15,213			21,425			(6,212	)		(29	%)
Voyage revenue per day		2,839			—			2,839			N/A
Operating costs per day		8,189			7,819			370			5	%
Time charter revenue days		854			693			161			23	%
Pool revenue days		634			486			148			30	%
Voyage revenue days		10			—			10			N/A
Operating days		1,510			1,095			415			38	%
Average number of owned vessels		4.14			3.00			1.14			38	%
Average number of time chartered-in vessels		0.05			0.33			(0.28	)		(85	%)

Vessel Revenue. The increase in revenue of $1.7 million, or 6%, was the result of an increase in the overall number of total revenue days from 1,179 days in 2009 to 1,499 days in 2010. This was driven by the acquisition of the STI Harmony and STI Heritage in June 2010 which were acquired with existing time charter contracts that expired in September and December 2010, respectively. These, along with the time charter contracts with the Noemi and Senatore comprised the time charter revenue for 2010. This is compared to 2009 where only the Noemi and Senatore were under time charter arrangements beginning in 2007. The time charter contract for the Senatore expired in August 2010 and the time charter contract for the Noemi is scheduled to expire in December 2011.

The number of days of vessels employed in the pool increased from 486 in 2009 to 634 in 2010. In 2010, four of our owned vessels and one of our time chartered-in vessels operated in the Scorpio Panamax Tanker Pool. In 2009 the Venice and Noemi (which was under a time charter-in arrangement) were the only vessels operating in the pool (Scorpio Panamax Tanker Pool). The increase was offset by an overall decrease in daily TCE rates from $21,425 per day in 2009, to $15,213 per day in 2010.

Vessel operating costs. Vessel operating costs increased as a result of an increase in the number of operating days from 1,095 in 2009 to 1,510 in 2010 which was driven by the purchase of the STI Harmony and STI Heritage in the second quarter 2010.

Voyage expenses. The increase in voyage expenses is a result of the Senatore operating in the spot market for 10 days subsequent to the termination of its time charter agreement and prior to its entry in the Scorpio Panamax Tanker Pool.

Charterhire. Charterhire expense of $0.3 million for the year ended December 31, 2010 decreased $2.8 million, or 91%, from $3.1 million for the year ended December 31, 2009. The decrease was due to 101 less operating days in the year ended December 31, 2010 and a reduction in the charter-hire rate we paid on our time chartered-in vessels in 2010 compared to 2009. The BW Zambesi was chartered in for a total of 20 days in 2010 at a charter-hire rate of $13,850 per day. The Noemi was chartered-in by us for 121 days in 2009 at a charter-hire rate of $26,750 per day plus a 50% profit and loss arrangement where we agreed to pay 50% of the vessel’s earnings in the pool above the daily charter-hire rate, and we would receive 50% of the vessels earnings in the pool below $26,750 per day. For the year ended December 31, 2009, we recorded a reduction in the charterhire expense of $108,000 because the vessel’s earnings in the pool were less than $26,750 per day.

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Impairment. In the year ended December 31, 2009, we recognized an impairment loss of $4.5 million for Noemi and Senatore, both Panamax vessels. No impairment was recognized in 2010.

Depreciation. Depreciation and amortization expense of $7.5 million for the year ended December 31, 2010, increased $0.7 million, or 10%, from $6.8 million for the year ended December 31, 2009. The increase in depreciation expense was primarily due to an increase in our average number of owned vessels from 3.00 in 2009 to 4.14 in 2010. This increase was offset by the effect from a change in the depreciable life of our owned vessels from 20 to 25 years, which occurred in the second quarter of 2010, together with the effect of an increase in estimated residual values of our vessels. See discussion of these changes in Note 1 to the audited consolidated financial statements included in “ITEM 18 Financial Statements.”

General and administrative expense. General and administrative expense of $0.6 million for the year ended December 31, 2010, increased $0.2 million or 44% from $0.4 million for the year ended December 31, 2009. General and administrative expenses for the Panamax/LR1 segment primarily consist of commercial management fees and administrative fees to SCM. The increase is the result of an increase in the average number of owned vessels from 3.00 in 2009 to 4.14 in 2010. These fees are described in Note 15 to the audited consolidated financial statements in “ITEM 18 Financial Statements”.

Financial expenses. Financial expenses were $0.2 million for the year ended December 31, 2010, a decrease of approximately $0.6 million or 81% from $0.7 million for year ended December 31, 2009. Financial expenses for the Panamax/LR1 segment represents interest for the 2005 Credit Facility. Interest expense in 2010 represents only three months of interest as this facility was repaid in April 2010 while 2009 represents interest expense incurred for the entire year.

Net realized/unrealized (loss) on derivative financial instruments. Gain/(loss) on derivatives from our interest rate swap, which consists of realized and unrealized gains and losses, was a realized loss of $0.3 million for the year ended December 31, 2010. For the year ended December 31, 2009, there was an unrealized gain of $1.0 million offset by a realized loss of $0.8 million. The unrealized gains and losses reflect the adjustment of the market value of the swap (the contract rate versus the current market rate). The realized loss is the result of the settlement difference between contracted interest rates and the actual market interest rates (LIBOR). The interest rate swap, which was related to the 2005 Credit Facility, was terminated on April 9, 2010.

Other expense, net. Other expense, net was a loss of $4,420 for the year ended December 31, 2010, and a net loss of $256,292 for the year ended December 31, 2009. The change was primarily driven by expenses incurred in 2009 for the initial public offering in April 2010. IPO related expenses incurred in 2010 were not recorded as part of the Panamax/LR1 segment.

Aframax/LR2 segment

On November 2010, we took delivery of the STI Spirit, a 113,091 dwt Aframax/LR2 product tanker. From delivery on November 10, 2010 through January 11, 2011, the STI Spirit operated in the Scorpio Aframax Tanker Pool, which traded a mix of crude and product tankers. As of March 25, 2011, this vessel joined the Scorpio LR2 Pool, which focuses solely on product tankers. This is the only vessel operating in our Aframax/LR2 segment. We did not have vessels operating in this segment in prior years.

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The following table summarizes vessel operations for our Aframax segment.

	For the year
Aframax/LR2 segment	Ended December 31,
	2010
Vessel revenue	$	641,278
Vessel operating costs		(426,788	)
Depreciation		(293,211	)
General and administrative expenses		(14,747	)
Financial income		778
Segment loss	$	(92,690	)
Pool revenue per day		12,460
Operating costs per day		8,293
Pool revenue days		51
Operating days		51
Average number of owned vessels		0.14

Handymax segment

In June and July 2010 we took delivery of the Handymax vessels STI Conqueror, STI Gladiator, STI Matador and STI Highlander. These vessels operated in the spot market prior to their entry in the Scorpio Handymax Tanker Pool for a total of 167 days. These vessels currently comprise all of the vessels in our Handymax operating segment. We did not have vessels operating in this segment in prior years.

The following table summarizes vessel operations for our Handymax segment.

	For the year
Handymax segment	Ended December 31,
	2010
Vessel revenue	$	8,812,130
Vessel operating costs		(5,649,736	)
Voyage expenses		(2,289,192	)
Depreciation		(2,389,669	)
General and administrative expenses		(266,509	)
Financial income		1,383
Segment loss	$	(1,781,593	)
Pool revenue per day		9,965
Voyage revenue per day		8,077
Operating costs per day		8,107
Pool revenue days		520
Voyage revenue days		167
Operating days		697
Average number of owned vessels		1.91

B. Liquidity and Capital Resources

Our primary source of funds for our short-term and long-term liquidity needs will be the cash flows generated from our vessel operations, which are currently operating in pools or in the spot market, in addition to availability under our 2010 Revolving Credit Facility, our Newbuilding Credit Facility, our 2011 Credit Facility, and from the proceeds from the sale of the STI Conqueror, STI Matador and STI Gladiator. The pools reduce volatility because (i) they aggregate the revenues and expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula and (ii) some of the vessels in the pool are on time charter. Furthermore, spot charters provide flexibility and allow us to fix vessels at prevailing rates. We believe these cash flows from operations, amounts available under our various credit facilities, and our cash balance will be sufficient to meet our existing liquidity needs for the next 12 months from the date of this annual report.

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As of December 31, 2011, our cash balance was $36.8 million, which is down from our cash balance of $68.2 million as of December 31, 2010. Additionally, at December 31, 2011 we had $37.9 million in availability under our 2010 Revolving Credit Facility which was converted from a term loan to a reducing revolving credit facility in July 2011. The decrease in cash balance was due to operating cash outflows, the acquisition of vessels (both second hand and deposits on newbuildings) and bank loan repayments. These outflows were offset by proceeds from our follow-on offerings in May and November 2011 along with drawdowns from our credit facilities.

For the year ended December 31, 2011, our net cash outflow from operating activities was $12.5 million, our net cash outflow from investing activities was $122.6 million and the net cash inflow from financing activities was $103.7 million. For the year ended December 31, 2010, our net cash inflow from operating activities was $4.9 million, our net cash outflow from investing activities was $245.6 million and the net cash inflow from financing activities was $308.4 million.

As of December 31, 2011, our long-term liquidity needs were comprised of our debt repayment obligations for our credit facilities, our obligations for our vessels under construction, and obligations under our eight time charter-in arrangements.

Our credit facilities require us to comply with a number of covenants, including financial covenants related to liquidity, consolidated net worth, minimum interest coverage, maximum leverage ratios, loan to value ratios and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the manager of the vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

No vessels are scheduled to be drydocked within the next 12 months.

Cash Flows

The table below summarizes our sources and uses of cash for the periods presented:

	For the year
	Ended December 31,
	2011			2010			2009
Condensed Cash Flows
Net cash inflow/(outflow) in respect of:
Operating activities	$	(12,451,163	)	$	4,906,478		$	9,305,851
Investing activities		(122,573,437	)		(245,594,809	)		—
Financing activities		103,670,788			308,430,737			(12,468,990	)

For the Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010

Cash inflow/(outflow)

Net cash outflow operating activities was $12.5 million for the year ended December 31, 2011, which was a decrease of $17.4 million from the year ended December 31, 2010. The decrease was primarily attributable to (i) an increase in vessel operating costs of $12.9 million, (ii) an increase in voyage expenses of $4.3 million, (iii) an increase in charterhire expense of $22.5 million, (iv) an increase in general and administrative expenses of $4.4 million (excluding non-cash items), (v) a net increase in interest expense of $3.8 million, (vi) a net increase in working capital of $11.5 million, (vii) a decrease in receipts from shareholders of $1.9 million, and (viii) an increase in drydock payments of $1.5 million. These decreases were partially offset by (i) an increase in vessel revenue of $43.3 million, (ii) a decrease in other expenses of $0.4 million and (iii) a decrease in interest rate swap termination payments of $1.9 million. .

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Cash outflow from investing activities

Cash outflow from investing activities was $122.6 million for the year ended December 31, 2011 compared to $245.6 million for the year ended December 31, 2010. Investment activity during the year ended December 31, 2011 was driven by the purchase of the STI Coral and STI Diamond for an aggregate purchase price of $71.0 million (including a 1% commission paid to Liberty, our related party Administrator (at that time), along with other capitalized costs). Additionally, on June 2, 2011, we entered into agreements with Hyundai for the construction of five newbuilding vessels for approximately $37.4 million each. The vessels are scheduled to be delivered to us between July 2012 and September 2012. On December 21, 2011, we entered into another agreement with Hyundai for the construction of a sixth newbuilding vessel for $36.4 million which is scheduled for delivery in January 2013.

As of December 31, 2011, approximately $51.0 million has been paid as installment payments on all vessels. The following table is a timeline of future expected payments and dates as of December 31, 2011*:

Q1 2012	$	18.7	million
Q2 2012		18.6	million
Q3 2012		110.2	million
Q4 2012		3.6	million
Q1 2013		21.8	million
	$	172.9	million

*These are estimates only and are subject to change as construction progresses. The above does not include the seventh newbuilding contract that we entered into on February 17, 2012.

Investment activity during the year ended December 31, 2010 was driven by the purchase of seven product tankers during the period. Two of the tankers, STI Harmony and STI Heritage, are LR1 ice class 1A sister ships and were acquired for an aggregate purchase price of $92.9 million (including a 1% commission paid to Liberty, a related party), which included $2.3 million related to the value of the existing time charter contracts. Four of the other vessels, STI Conqueror, STI Matador, STI Gladiator and STI Highlander are Handymax vessels that were acquired for $100.0 million in aggregate (including a 1% commission paid to Liberty, our related party Administrator). The last vessel, the STI Spirit was acquired for $52.7 million which included $0.1 million related to the value of purchase options on two additional vessels which expired unexercised in September 2011.

Cash inflow from financing activities

Cash inflow from financing activities was $103.7 million for the year ended December 31, 2011 compared to $308.4 million for the year ended December 31, 2010. Financing activity during the year ended December 31, 2011 was driven by net proceeds of $68.5 million from the underwritten offering in May 2011, net proceeds of $36.5 million from the underwritten offering in November 2011, borrowings of $35.0 million under the 2011 Credit Facility, borrowings of $27.3 million under the STI Spirit Credit Facility, and borrowings of $53.0 million under the 2010 Revolving Credit Facility offset by payments of $99.0 million into the 2010 Revolving Credit Facility, principal payments on all of our credit facilities of $10.6 million, payment of deferred financing fees of $4.1 million under the 2011 Credit Facility, STI Spirit Credit Facility and the 2010 Revolving Credit Facility along with $2.9 million of costs related to the repurchase of our common shares. Financing activity during the year ended December 31, 2010 was driven by the net proceeds of the initial public offering of $154.8 million and $150.0 million of borrowings under the 2010 Revolving Credit Facility, which were offset by principal payments of $4.8 million under the 2010 Revolving Credit Facility, the repayment of $39.8 million under the 2005 Credit Facility, $2.6 million of costs related to the repurchase of our common shares and the payment of deferred financing fees of $2.2 million under the 2010 Revolving Credit Facility.

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Cash flows for the year ended December 31, 2010 compared to the year ended December 31, 2009

Cash inflow from operating activities

Net cash inflow from operating activities was $4.9 million for the year ended December 31, 2010, which was a decrease of $4.4 million from the year ended December 31, 2009. The primary reasons for the decrease were (i) an increase in vessel operating expenses of $9.9 million, (ii) an increase in voyage expenses of $2.5 million (iii) an increase in general and administrative expenses of $5.8 million, (iv) an increase in interest expense of $2.5 million, (v) a net increase in other assets and liabilities of $7.5 million and (vii) an interest rate swap termination payment of $1.9 million. These increases were offset by (i) an increase in vessel revenue of $11.2 million, (ii) a decrease in charter hire expense of $2.8 million, (iii) a decrease of realized losses on derivative financial instruments of $0.5 million, (iv) a decrease in drydock payments of $0.6 million, (v) a decrease of shareholder receivables $3.9 million, (vi) a one-time payment to shareholders of $3.2 million in 2009 and (vii) non-cash amortization expense of $3.3 million (relating to the amortization of acquired time charter contracts of $2.3 million and restricted stock amortization of $1.0 million which is included in the change in vessel revenue and general and administrative expenses above).

Cash outflow from investing activities

Cash outflow from investing activities was $245.6 million for the year ended December 31, 2010; no cash was used for investing activities in the year ended December 31, 2009. This increase is entirely attributable to the cash payments for the purchase and delivery of three vessels in June 2010, two vessels in July 2010, one vessel in August 2010 and one vessel in November 2010.

Two of the tankers delivered in June 2010 were LR1 ice class 1A sister ships, STI Harmony and STI Heritage, and were acquired for an aggregate price of $92.9 million (including a 1% commission paid to Liberty, our related party Administrator at that time), which included an estimated $2.3 million related to the value of the existing time charter contracts. The third vessel delivered in June 2010 was the STI Conqueror, which is a Handymax ice class 1B ship, and was acquired for $26.3 million (including a 1% commission paid to Liberty, our related party Administrator).

The vessels delivered in July 2010 were the STI Matador and STI Gladiator which are Handymax vessels and were acquired for an aggregate price of $46.4 million (including a 1% commission paid to Liberty, our related party Administrator).

The vessel delivered in August 2010, the STI Highlander, which is a Handymax vessel was acquired for a purchase price of $27.3 million (including a 1% commission paid to Liberty, our related party Administrator).

The vessel acquired in November 2010, the STI Spirit, an LR2 Aframax product tanker for a purchase price of $52.7 million (including a 1% commission paid to Liberty, our related party Administrator).

The agreement also included two purchase options with the seller. Each option granted us the right, but not the obligation, to purchase a 2008 built LR1 ice class-1A product tanker (approximately 63,600 dead weight tons) for a price of $45.0 million and these options expired unexercised in September 2011

Cash inflow /(outflow) from financing activities

Cash flow from financing activities was an inflow $308.4 million for the year ended December 31, 2010, and an outflow of $12.5 million for the year ended December 31, 2009 representing a $320.9 million increase in cash flow compared to the prior year. This increase was due to the net proceeds of the initial public offering of $154.8 million, proceeds from the issuance of long-term debt under the 2010 Revolving Credit Facility of $150.0 million and net proceeds from the follow-on offering in November 2010 of $53.2 million offset by principal payments on the 2010 Revolving Credit Facility of $4.8 million, the repayment of the 2005 Credit Facility of $39.8 million, payment of deferred financing fees under the 2010 Revolving Credit Facility of $2.2 million and the acquisition of treasury shares of $2.6 million. Cash outflow from financing activities for the year ended December 31, 2009 was attributable to dividends paid of $8.6 million, bank loan repayments of $3.6 million and the payment expenses related to the initial public offering of $0.3 million.

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Long-Term Debt Obligations and Credit Arrangements

2005 Credit Facility

Two of our wholly-owned subsidiaries, Senatore Shipping Company Limited and Noemi Shipping Company Limited, were joint and several borrowers under a loan agreement dated May 17, 2005, or the 2005 Credit Facility, entered into with The Royal Bank of Scotland plc, as lender, which was secured by, among other things, a first preferred mortgage over each of Senatore and Noemi. The initial amount of the 2005 Credit Facility was $56.0 million and consisted of two tranches, one for each vessel-owning subsidiary. On April 9, 2010, we repaid the outstanding balance of $38.9 million with a portion of the proceeds from our initial public offering.

2010 Revolving Credit Facility

On June 2, 2010, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA, acting through its New York branch, and Fortis Bank Nederland, for a senior secured term loan facility of up to $150 million. On July 12, 2011, we amended and restated the credit facility to convert it from a term loan to a reducing revolving credit facility. This gave us the ability to pay down and re-borrow from the total available commitments under the loan.  The total available commitments will reduce by $4.1 million each quarter, with a lump sum reduction of $76.0 million at the maturity date of June 2, 2015.  Our subsidiaries that own vessels that are collateralized by this loan will act as guarantors under the amended credit facility.  All terms mentioned are defined in the agreement.

On September 22, 2011 and on December 22, 2011, we amended the interest rate margin and certain financial covenants in the facility.

Drawdowns under the credit facility bear interest as follows: (1) through December 29, 2011, at LIBOR plus an applicable margin of 3.00% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR plus an applicable margin of 3.50% per annum; and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an applicable margin of 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization ratio is greater than 50%. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on June 2, 2015 and can only be used to refinance amounts outstanding from the original loan agreement and for general corporate purposes.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approval on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants require us to maintain:

· A ratio of debt to capitalization no greater than 0.60 to 1.00.

· Consolidated tangible net worth no less than $150 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter beginning on July 1, 2010 and 50% of the value of any new equity issues from July 1, 2010 going forward.

· A ratio of EBITDA to interest expense no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point the ratio will increase to: (i) 1.50 to 1.00 for the first quarter of 2013, (ii) 1.75 to 1.00 for the second quarter of 2013 and (iii) 2.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater.  EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

· Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel. 

· The aggregate fair market value of the collateral vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.

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In August 2011, we reduced the outstanding balance by $65 million, in September 2011 we drew down $6 million and in December 2011 we reduced the outstanding balance by $34 million and drew down $47 million. The outstanding balance at December 31, 2011 and 2010 was $91.0 million and $145.2 million, respectively. As of December 31, 2011, there were $37.9 million in available borrowings under this facility and we were in compliance with the loan covenants described above.

STI Spirit Credit Facility

On March 9, 2011, we executed a credit facility with DVB Bank SE for a senior secured term loan facility of $27.3 million for the STI Spirit, which was acquired on November 10, 2010. The credit facility was drawn down on March 17, 2011 and matures on March 17, 2018. On September 28, 2011 and on December 30, 2011, we amended certain financial covenants contained in the credit facility. The loan bears interest at LIBOR plus a margin of 2.75% per annum. The loan is repayable over 28 equal quarterly installments and a lump sum payment at maturity. The quarterly installments commenced three months after the drawdown and were calculated using an 18 year amortization profile. Our subsidiary, STI Spirit Shipping Company Limited, which owns the vessel, is the borrower and Scorpio Tankers Inc. is the guarantor. The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the vessel; restrictions on consolidations, mergers or sales of assets; approval of changes in the Manager of our vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants of the credit facility are described below. On September 28, 2011, we executed an amendment modifying the EBITDA to interest expense financial covenant. On December 30, 2011, we entered into a first amendatory agreement modifying certain other financial covenants.

The financial covenants require us to maintain:

· A ratio of debt to capitalization no greater than 0.60 to 1.00.

· Consolidated tangible net worth no less than $150 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter.

· A ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 for the period commencing with the fourth quarter of 2011 through the fourth quarter of 2012, at which time it will increase to: (i) 1.50 to 1.00 for the first quarter of 2013, (ii) 1.75 to 1.00 for the second quarter of 2013 and (iii) 2.00 to 1.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis.  In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater.  EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

· Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

· An aggregate fair market value of the STI Spirit not less than (i) 140% of the then outstanding loan balance if the vessel is operating in a pool or in the spot market or (ii) 130% of the then outstanding loan if the vessel is on time charter with a duration of at least one year.

As of December 31, 2011, the outstanding balance under this facility was $26.2 million and we were in compliance with the loan covenants described above.

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2011 Credit Facility

On May 3, 2011, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA, acting through its New York branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150 million. On September 22, 2011 and December 22, 2011 we amended the loan agreement to extend the availability period and we amended the margin and certain financial covenants.

Borrowings under this credit facility are available until May 3, 2013. Drawdowns under the credit facility bear interest as follows: (1) until December 29, 2011, at LIBOR plus an applicable margin of (i) 2.75% per annum when our debt to capitalization (total debt plus equity) ratio is less than 45%, (ii) 3.00% per annum when our debt to capitalization ratio is greater than or equal to 45% but less than or equal to 50% and (iii) 3.25% when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR plus an applicable margin of 3.50% per annum and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater than 50%.  A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on May 3, 2017 and can only be used to finance up to 50% of the cost of future vessel acquisitions, which vessels would be the collateral for the credit facility.

Borrowings for each vessel financed under this facility represent a separate tranche, with repayment terms dependent on the age of the vessel at acquisition. Each tranche under the new credit facility is repayable in equal quarterly installments, with a lump sum payment at maturity, based on a full repayment of such tranche when the vessel to which it relates is sixteen years of age. Our subsidiaries, which may at any time, own one or more of our vessels, will act as guarantors under the credit facility.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants require us to maintain:

· A ratio of debt to capitalization no greater than 0.60 to 1.00.

· Consolidated tangible net worth not less than $150 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 1, 2010 going forward .

· A ratio of EBITDA to interest expense not less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it will increase to: (i) 1.50 to 1.00 for the first quarter of 2013, (ii) 1.75 to 1.00 for the second quarter of 2013 and (iii) 2.00 to 1.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater.  EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

· Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

· An aggregate fair market value of the collateral vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.

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As of December 31, 2011, the outstanding balance under this facility was $33.6 million and we were in compliance with the loan covenants described above.

Newbuilding Credit Facility

On December 21, 2011, we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB for a senior secured term loan facility of up to $92.0 million. The credit facility may be used only for the partial financing of the pre-delivery and delivery installments of four newbuilding 52,000 DWT MR product tankers that the Company contracted for in June 2011 with Hyundai and which are scheduled for delivery between July and September 2012. The newbuilding vessels will be owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility and Scorpio Tankers Inc. is the guarantor. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin of 2.70% per annum.  A commitment fee equal to 1.10% per annum is payable on the unused daily portion of the credit facility.  

The facility will be made available in four tranches, one for each vessel, each in the amount of $23.0 million, which is approximately 61% of contracted price for each vessel.  Drawdowns under each tranche will be available after the first 39% of the contracted price for each vessel is paid by the Company and subject to certain other conditions precedent.  The four vessels will be collateral for the credit facility.  Repayment of the tranche relating to the respective vessel will commence after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years, and each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants require us to maintain:

· A ratio of debt to capitalization no greater than 0.60 to 1.00.

· Consolidated tangible net worth not less than $150 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 2, 2010 going forward.

· A ratio of EBITDA to interest expense not less than 2.00 to 1.00 commencing with the third fiscal quarter of 2011 until the fourth quarter of 2012, and 2.50 to 1.00 for all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis.  EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

· Unrestricted cash and cash equivalents not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel. 

· An aggregate fair market value of the collateral vessels shall at all times not less than 140% (120% if the vessel is subject to acceptable long term employment) of the aggregate principal amount outstanding plus a pro rata amount of any allocable swap exposure for the credit facility.

There were no borrowings outstanding as of December 31, 2011 and we were in compliance with the loan covenants described above.

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Interest Rate Swaps

In August 2011, we entered into six interest rate swap agreements with three different banks to manage the interest costs and the risk associated with changing interest rates on our 2011 Credit Facility and 2010 Revolving Credit Facility. The notional amount of the swaps relating to the 2011 Credit Facility is $24 million with an average fixed rate of 1.30% starting on July 2, 2012 and expiring on June 30, 2015. The notional amount of the swaps relating to the 2010 Revolving Credit Facility is $51 million with an average fixed rate of 1.27% starting on July 2, 2012 and expiring on June 2, 2015. Hedge effectiveness is measured quarterly and as of December 31, 2011. All of the interest rate swap agreements qualified for hedge accounting and were deemed to be effective; therefore, any adjustment to the market value of the interest rate swaps appears in other comprehensive (loss) income (within equity, outside of the Profit or Loss statement). The fair market value was a liability of $0.7 million at December 31, 2011.

Equity

On April 6, 2010, we closed the issuance of 12,500,000 shares of common stock at $13.00 per share in our initial public offering and received net proceeds of $149.6 million, after deducting underwriters’ discounts and offering expenses.

On April 9, 2010, using a portion of the proceeds of our initial public offering, we repaid in full the outstanding balance of $38.9 million due under the credit facility entered into by our subsidiaries Senatore Shipping Company Limited and Noemi Shipping Company Limited with The Royal Bank of Scotland plc, as lender, in 2005, or the 2005 Credit Facility.

On May 4, 2010, pursuant to the underwriters’ exercise of their over-allotment option that we granted in connection with our initial public offering, we closed the issuance of 450,000 shares of common stock at $13.00 and received $5.2 million, after deducting underwriters’ discounts.

On November 22, 2010, we closed on a follow-on public offering of 4,575,000 shares of common stock at $9.80 per share. After deducting underwriters' discounts and paying offering expenses, the net proceeds were $41.8 million, and 510,204 shares were issued in a concurrent private placement to a member of the Lolli-Ghetti family for total proceeds of $5.0 million. On December 2, 2010, we closed the issuance of 686,250 shares of common stock at $9.80 and received $6.4 million, after deducting underwriters' discounts, when the underwriters in our follow-on public offering fully exercised their over-allotment option.

On May 18, 2011, we closed on a follow-on public offering of 6,000,000 shares of common stock and also closed on the underwriters’ over-allotment option to purchase 900,000 additional common shares at the offering price of $10.50 per share. We received net proceeds of $68.5 million, after deducting underwriters' discounts and offering expenses.

On December 6, 2011, we closed on a follow-on public offering of 7,000,000 shares of common stock at the offering price of $5.50 per share. We received net proceeds of $36.5 million, after deducting underwriters' discounts and estimated offering expenses.

CAPITAL EXPENDITURES

Vessel acquisitions

In the first half of June 2010, we took delivery of three product tanker vessels that we previously agreed to acquire. STI Conqueror, a Handymax ice class 1B ship, was acquired for $26.0 million. This vessel was sold in March 2012 for a selling price of $21.0 million. STI Harmony and STI Heritage, LR1 ice class 1A sister ships, were acquired for an aggregate price of $92.0 million, which included $2.3 million for the value of the existing time charter contracts. The value of the time charter contracts was amortized as a reduction to vessel revenue over the remaining life of the time charter contracts. STI Harmony and STI Heritage entered the Scorpio Panamax Tanker Pool upon the completion of their time charters in September 2010 and December 2010, respectively.

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In July 2010, we took delivery of three Handymax tankers, STI Matador, STI Gladiator and STI Highlander for an aggregate price of $73.0 million. These vessels trade in the Scorpio Handymax Tanker Pool. We signed agreements to sell the STI Gladiator and STI Matador for $16.2 million each in February 2012. These sales are expected to close in April 2012.

In November 2010, we took delivery of an LR2 Aframax product tanker, STI Spirit, for which we paid a purchase price of $52.2 million.

Additionally, we capitalized $2.4 million as part of these vessel purchases for the 1% fee of the gross purchase or sale price that we pay our Administrator upon the consummation of any such purchase or sale.

On May 10, 2011, we took delivery of two product tankers, STI Coral and STI Diamond, for an aggregate purchase price of $70.0 million.  The ships were built in 2008 at the STX shipyard in Korea and trade in the spot market. Additionally, we capitalized $0.7 million as part of these vessel purchases for the 1% fee of the gross purchase or sale price that we pay our Administrator upon the consummation of any such purchase or sale.

Newbuildings with Hyundai Mipo Dockyard Co. Ltd. (“Hyundai”)

On June 6, 2011, we signed contracts with Hyundai to construct five MR product tankers for approximately $37.4 million each. The vessels are scheduled to be delivered to the Company between July 2012 and September 2012.

On December 21, 2011, we signed a contract with Hyundai to construct an additional MR product tanker for approximately $36.4 million. This vessel is scheduled to be delivered to the Company in January 2013.

We have made payments of $50.4 million on all of these vessels as of December 31, 2011. Furthermore, on December 28, 2011 the keels were laid on the first five newbuilding vessels. We made a related progress payment of $9.4 million in January 2012 which was accrued for at December 31, 2011.

Furthermore, in February 2012, we signed a contract with Hyundai to construct a newbuilding vessel for $36.0 million, which is our seventh MR newbuilding product tanker with Hyundai. The seventh newbuilding is scheduled to be delivered in April 2013. A $3.6 million deposit has been paid to Hyundai as of the date of this report.

Our commitments under all newbuilding vessel agreements, including the seventh newbuilding are as follows as of March 23, 2012:

Q2 2012	$	22.2	million
Q3 2012		113.8	million
Q4 2012		7.2	million
Q1 2013		21.8	million
Q2 2013		21.6	million
	$	186.6	million

Vessel disposals

In February 2012, we entered into agreements to sell three of our Handymax vessels: the STI Conqueror for $21.0 million, the STI Gladiator for $16.2 million, and the STI Matador for $16.2 million. The sale of the STI Conqueror closed on March 20, 2012 and the sales of the STI Gladiator and STI Matador are expected to close in April 2012. In connection with these sales, the availability of the Company's 2010 Revolving Credit Facility will decrease by approximately $31.0 million.

As part of the sale of all three vessels, the Company will record a $4.0 million loss on disposal in the first quarter of 2012. Additionally, approximately $0.5 million of deferred financing fees attributable to the 2010 Revolving Credit Facility will be written off upon closing of the sale.

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Drydock

During 2011, we drydocked three of our owned vessels (Venice, STI Harmony, STI Highlander) for an aggregated drydock cost of $2.6 million and a total of approximately 67 off-hire days. The individual vessel drydock costs and off-hire days were as follows:

· Venice: $1.2 million and 23 off-hire days;

· STI Harmony: $0.6 million and 21 off-hire days;

· STI Highlander: $0.8 million and 23 off-hire days; and

As our fleet matures and expands, our drydock expenses will likely increase. Ongoing costs for compliance with environmental regulations and society classification survey costs are a component of our vessel operating costs. We are not currently aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on our results of operations or financial condition.

Dividends

We do not have immediate plans to pay dividends, but we will continue to assess our dividend policy. In the future, our board of directors may determine to pay dividends.

Share Buy-Back

On July 9, 2010, the board of directors authorized a share buy-back program of $20 million. As of December 31, 2011, we had repurchased 723,665 shares of our common stock at an average price per share of $7.5981. See ITEM 16.E for further information.

C. Research and Development, Patents and Licenses, Etc.

Not applicable.

D. Trend Information

See ITEM 4.B “The International Tanker Industry”.

E. Off-Balance Sheet Arrangements

As of December 31, 2011, we were committed to make charter-hire payments to third parties for certain chartered-in vessels. These arrangements are accounted for as operating leases.

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F. Tabular Disclosure of Contractual Obligations

The following table sets forth our total contractual obligations at December 31, 2011:

	Less than		1 to 3		3 to 5		More than
	1 year		years		years		5 years
Bank Loans (1)	$	4,245,540	$	19,439,650	$	88,581,582	$	38,577,758
Bank Loan—Interest payments (2)		6,899,104		13,245,702		5,559,885		1,108,204
Bank Loan - Commitment fees (3)		2,681,494		904,886		—		—
Time charter-in commitments (4)		21,003,620		5,943,250				—
Technical management fees (5)		1,573,856		460,320		—		—
Commercial management fee s(6)		37,200		—		—		—
Newbuilding Installments  (7)		151,190,625		21,840,000		—		—
Total	$	187,631,439	$	61,833,809	$	94,141,467	$	39,685,962

(1)	Represents principal payments due on our 2010 Revolving Credit Facility, 2011 Credit Facility and STI Spirit Credit Facility based on our outstanding borrowings as of December 31, 2011.
(2)	The interest payments in the above schedule were calculated as follows, based on drawings as of December 31, 2011:

· For the 2010 Revolving Credit Facility, we calculated interest expense in the following manner:

i

We used a fixed interest rate of 1.27% on the notional amount of our interest rate swaps of $51 million during the time period the swap is outstanding (July 1, 2012 through June 2, 2015).

ii

For all amounts due in excess of the notional amount on our swap arrangements, we used the average of the 3 and 4 year interest swap rates of 0.94% (as published by the US Federal Reserve as of December 30, 2011) plus a margin of 3.50%, which is the margin for the 2010 Revolving Credit Facility.  We used the average of the 3 and 4 year interest swap rates because this facility matures on June 2, 2015.

· For the 2011 Credit Facility, we calculated interest expense in the following manner: 

i	We used a fixed interest rate of 1.30% on the notional amount of our interest rate swaps of $24 million during the time period the swap is outstanding (July 1, 2012 through June 30, 2015).
ii	For all amounts due in excess of the notional amount on our swap arrangements, we the 5 year interest swap rate of 1.25% (as published by the US Federal Reserve as of December 30, 2011) plus a margin of 3.50%, which is the margin for the 2011 Credit Facility.  We use the 5 year interest swap rate because this facility matures on May 3, 2017.

· For the STI Spirit Credit Facility, a 7 year interest swap rate of 1.65% (as published by the US Federal Reserve as of December 30, 2011) plus a margin of 2.75%, which is the margin for the STI Spirit Credit Facility. This facility matures on March 17, 2018, hence the use of the 7 year interest swap rate.

(3)	A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of our 2010 Revolving Credit Facility,  the 2011 Credit Facility and the Newbuilding Credit Facility.  The STI Spirit Credit Facility was fully drawn as of December 31, 2011.
(4)	Represents amounts due under our time charter-in arrangements as of December 31, 2011 for the Kraslava, Krisjanis Valdemars, Histria Azure, Kazdanga, Histria Perla and Histria Coral.
(5)	We pay our technical manager, SSM, $548 per day per owned vessel.
(6)	We pay our commercial manager, SCM, $250 per day per owned vessel plus 1.25% of gross revenue for vessels that are not in a pool. This amount represents the estimated minimum commercial management fees for the Noemi, which was under a time charter-out contract until December 2011 and whose revenues are contractually committed to until such time. No gross revenue estimate was made for STI Coral and STI Diamond, which are also not operating in the pools, as these vessels are operating in the spot market where no revenues are guaranteed.
(7)	Represents obligations under our agreements with Hyundai for the construction of our first six Newbuilding Vessels, as of December 31, 2011, with the first five scheduled to be delivered to us between July 2012 and September 2012 and the sixth scheduled for January 2013.

G. Safe Harbor

See “Cautionary Statement Regarding Forward-Looking Statements” at the beginning of this annual report.

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CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the accounting policies, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The significant judgments and estimates are as follows:

Revenue recognition

We currently generate all revenue from time charters, spot voyages, or pools. Revenue recognition for time charters and pools is generally less complex and subjective than voyage charters (spot voyages). Time charters are for a specific period of time at a specific rate per day. For long-term time charters, revenue is recognized on a straight-line basis over the term of the charter. Pool revenues are determined by the pool managers from the total revenues and expenses of the pool and allocated to pool participants using a mechanism set out in the pool agreement.

We generated revenue from spot voyages during the year ended December 31, 2011. Within the shipping industry, there are two methods used to account for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition of voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues and the method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates voyage results than the load-to-load basis. Since, at the time of discharge, management generally knows the next load port and expected discharge port, the discharge-to-discharge calculation of spot voyage revenues can be estimated with a greater degree of accuracy.

Vessel impairment

We evaluate the carrying amounts of our vessels to determine whether there is any indication that those vessels have suffered an impairment loss. If any such indication exists, the recoverable amount of vessels is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows related to vessels is complex and requires us to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile. As part of our process of assessing the fair value less cost to sell of the vessel, we obtain vessel valuations from leading, independent and internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be impaired. If an indication of impairment is identified, the need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessels to the higher of the fair value less cost to sell and the value in use. Likewise, if there is an indication that an impairment loss recognized in prior periods no longer exists or may have decreased, the need for recognizing an impairment reversal is assessed by comparing the carrying amount of the vessels to the latest estimate of recoverable amount.

At December 31, 2011, we determined fair value less estimated costs to sell for our vessels, taking into consideration three independent broker valuations for each vessel and adjusting for estimated disposal costs. Our estimate of fair value less costs to sell was then compared to each vessel’s respective carrying amount. The fair value less estimated costs to sell were lower than the carrying amount for all vessels indicating that an impairment might exist. We then performed a value in use calculation where we estimated each vessel’s future cash flows based on a combination of the latest forecast time charter rates for the next three years, a steady growth in freight rates in each period thereafter which is based management’s long-term view of the market, and our best estimate of vessel operating expenses and drydock costs. These cash flows were then discounted to their present value, using a discount rate based on our current borrowing rates adjusted for certain credit risks.

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The value in use calculations for all vessels were less than the fair value less estimated costs to sell and accordingly, the recoverable amount of all vessels was determined to be its fair value less costs to sell. As a result, we recorded an impairment loss of $66.6 million to adjust the carrying amounts of our vessels to their fair value less estimated selling costs.

Vessel lives and residual value

The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation. We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives. Effective April 1, 2010, we revised the estimated useful life of our vessels from 20 years to 25 years from the date of initial delivery from the shipyard. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap value per ton is estimated taking into consideration the historical four year scrap market rate average at the balance sheet date. This calculation is updated annually at December 31.

An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or scrap value would have the effect of increasing the annual depreciation charge.

When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel’s useful life is adjusted to end at the date such regulations become effective. The estimated salvage value of the vessels may not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.

Deferred drydock cost

We recognize drydock costs as a separate component of the vessels’ carrying amounts and amortize the drydock cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period between drydocks performed, which can result in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred at the drydock yard and parts and supplies used in making such repairs. We only include in deferred drydocking costs those direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Set forth below are the names, ages and positions of our directors and executive officers. Our board of directors is elected annually, and each director elected holds office for a three-year term or until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. The term of office of each director is as follows: Two will serve for a term expiring at the 2012 annual meeting of shareholders, one will serve for a term expiring at the 2013 annual meeting of shareholders, and two will serve for a term expiring at the 2014 annual meeting of the shareholders. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. The business address for each director and executive officer is the address of our principal executive office which is Scorpio Tankers Inc., 9, Boulevard Charles III, Monaco 98000.

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Messrs. Lauro and Bugbee, our Chief Executive Officer and President, respectively, participate in business activities not associated with the Company. As a result, Messrs. Lauro and Bugbee may devote less time to the Company than if they were not engaged in other business activities and may owe fiduciary duties to the shareholders of both the Company as well as shareholders of other companies which they may be affiliated, including other Scorpio Group companies. This may create conflicts of interest in matters involving or affecting the Company and its customers and it is not certain that any of these conflicts of interest will be resolved in our favor. While there will be no formal requirements or guidelines for the allocation of Messrs. Lauro’s and Bugbee’s time between our business and the business of members of the Scorpio Group, Messrs. Lauro’s and Bugbee’s performance of their duties will be subject to the ongoing oversight of our board of directors.

Name	Age	Position
Emanuele A. Lauro	33	Chairman, Class I Director, and Chief Executive Officer
Robert Bugbee	51	President and Class II Director
Brian Lee	45	Chief Financial Officer
Cameron Mackey	43	Chief Operating Officer
Luca Forgione	35	General Counsel
Sergio Gianfranchi	67	Vice President, Vessel Operations
Alexandre Albertini	35	Class III Director
Ademaro Lanzara	68	Class I Director
Donald C. Trauscht	77	Class II Director

Biographical information with respect to each of our directors and executive officers is set forth below.

Emanuele A. Lauro, Chairman & Chief Executive Officer

Emanuele A. Lauro, our founder, Chairman and Chief Executive Officer, joined Scorpio Group in 2003 and has continued to serve there in a senior management position since 2004. Under Mr. Lauro’s leadership, Scorpio Group has grown from an owner of three vessels in 2003 to an operator or manager of approximately 66 vessels in 2012. Over the course of the last six years, Mr. Lauro has founded and developed the Scorpio Aframax Tanker Pool, Scorpio LR2 Pool, Scorpio Panamax Tanker Pool and the Scorpio Handymax Tanker Pool. He also founded Scorpio Logistics in May 2007, a company within the Scorpio Group which owns and operates specialized assets engaged in coal transshipment in Indonesia and which engages in strategic investments in coastal shipping and port development in India. Furthermore, Mr. Lauro formed a joint venture with Koenig &cie., Scorship Navigation, in August 2005 which engages in the identification, placement, and management of certain international shipping investments on behalf of German investors. Mr. Lauro has a degree in international business from the European Business School, London, and he has served as the Vice President of the Chamber of Shipping of Monaco since 2006.

Robert Bugbee, President and Director

Robert Bugbee, our President, has more than 25 years of experience in the shipping industry. He joined Scorpio Group in February 2009 and has continued to serve there in senior management. Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management LLP between 2007 and 2008, a company which advises and invests in commodities and basic industry. From 1995 to 2007, Mr. Bugbee was employed at OMI Corporation, or OMI, a NYSE-listed tanker company sold in 2007. While at OMI, Mr. Bugbee most recently served as President from January 2002 until the sale of the company, and he previously served as Executive Vice President since January 2001, Chief Operating Officer since March 2000 and Senior Vice President of OMI from August 1995 to June 1998. Mr. Bugbee joined OMI in February 1993. Prior to this, he was employed by Gotaas-Larsen Shipping Corporation since 1984. During this time he took a two year sabbatical from 1987 for the M.I.B. Programme at the Norwegian School for Economics and Business administration in Bergen. He has a Fellowship from the International Shipbrokers Association and a B.A. (Honors) from London University.

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Brian Lee, Chief Financial Officer

Brian Lee, our Chief Financial Officer, joined Scorpio Group in April 2009. In June 2009, he became the Scorpio Group’s Controller. He has been employed in the shipping industry since 1998. Prior to joining Scorpio Group, he was the Controller of OMI Corporation from 2001 until the sale of the company in 2007. Mr. Lee has a M.B.A. from the University of Connecticut and has B.S. in Business Administration from the University at Buffalo, State University of New York.

Cameron Mackey, Chief Operating Officer

Cameron Mackey, our Chief Operating Officer, joined Scorpio Group in March 2009, where he has served as Chief Operating Officer. Prior to joining Scorpio Group, he was an equity and commodity analyst at Ospraie Management LLC from 2007-2008. Prior to that, he was Senior Vice President of OMI Marine Services LLC from 2004-2007 and in Business Development at OMI Corporation from 2002-2004. He has been employed in the shipping industry since 1994 and, earlier in his career, was employed in unlicensed and licensed positions in the merchant navy, primarily on tankers in the international fleet of Mobil Oil Corporation, where he held the qualification of Master Mariner. He has an M.B.A. from the Sloan School of Management at the Massachusetts Institute of Technology, a B.S. from the Massachusetts Maritime Academy and a B.A. from Princeton University.

Luca Forgione, General Counsel

Luca Forgione, our General Counsel, joined Scorpio Group in August 2009 as General Counsel. He is licensed as a lawyer in his native Italy and as a Solicitor of the Supreme Court of England & Wales. Mr. Forgione has eight years of shipping industry experience and has worked in the fields of shipping, offshore logistics, commodity trading and energy since the beginning of his in-house career, most recently with Constellation Energy Commodities Group Ltd. in London, which is part of Constellation Energy Group Inc. listed on the NYSE under “CEG,” from 2007 to 2009, and previously with CoeclericiS.p.a. in Milan from 2004 to 2007. He has experience with all aspects of the supply chain of drybulk and energy commodities (upstream and downstream), and has developed considerable understanding of the regulatory and compliance regimes surrounding the trading of physical and financial commodities as well as the owning, managing and chartering of vessels. Mr. Forgione was a Tutor in International Trade Law and Admiralty Law at University College London (U.K.) and more recently a Visiting Lecturer in International Trade Law at King’s College (U.K.). He has a Masters Degree in Maritime Law from the University of Southampton (U.K.) and a Law Degree from the University of Genoa (Italy).

Sergio Gianfranchi, Vice President, Vessel Operations

Sergio Gianfranchi, our Vice President of Vessel Operations, served as Operations Manager of our technical manager, SSM, at its headquarters in Monaco from 2002 to 2004. He has been instrumental in launching and operating the Scorpio Group’s Panamax, Handymax and Aframax pools during the last five years, and was employed as the Fleet Manager of SCM, the Scorpio Group affiliate that manages the commercial operations of approximately 50 vessels grouped in the three Scorpio Group Pools, from 2007 to 2009. Mr. Gianfranchi is currently employed as the Pool Fleet Manager of SCM. From 1999 to 2001, Mr. Gianfranchi served as the on-site owner’s representative of the Scorpio Group affiliates named Doria Shipping, Tristan Shipping, Milan Shipping and Roma Shipping, to survey the construction of their Panamax and Post-Panamax newbuilding tankers being built at the 3Maj Shipyard in Rijeka, Croatia. When Mr. Gianfranchi joined SSM in 1989, he began as vessel master of its OBOs (multipurpose vessels that carry ore, heavy drybulk and oil). Upon obtaining his Master Mariner License in 1972, he served until 1989 as a vessel master with prominent Italian shipping companies, including NAI, which is the largest private Italian shipping company and owned by the Lolli-Ghetti family, and Almare, initially a subsidiary of NAI but later controlled by Finmare, the Italian state shipping financial holding company. In this position he served mostly on OBOs, tankers and drybulk carriers. He graduated from La Spezia Nautical Institute in Italy in 1963.

Alexandre Albertini, Director

Alexandre Albertini has more than 10 years of experience in the shipping industry. He has been employed by Marfin Management SAM, a drybulk ship management company, since 1997 and has served as Managing Director there since 2009, working in fields related to crew and human resources, insurance, legal, financial, technical, commercial, and information technology. He is a director of eight drybulk ship owning companies and serves as President of Ant. Topic srl, a vessel and crewing agent based in Italy. The aggregate valuation of the drybulk shipping companies for which Mr. Albertini serves as a Secretary or director is approximately $300 million. In 2008, Mr. Albertini was elected as a member of the Executive Committee of InterManager. He is a founding member of the Chamber of Shipping of Monaco and has served as its Secretary General since 2006. Mr. Albertini also holds various board positions in several other local business and associations.

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Ademaro Lanzara, Director

Ademaro Lanzara has served as the Chairman of BPV Finance (International) Plc Dublin, a subsidiary of Banca Popolare di Vicenza, Italy, since 2008. He is also a director of Istituto dell’Enciclopedia Italiana fondata da Giovanni Treccani Spa, Rome. From 1963 to 2006, Mr. Lanzara held a number of positions with BNL spa Rome, a leading Italian banking group, including acting as the Chairman of the Credit Committee, Chairman of the Finance Committee and Deputy CEO. He also served as Chairman and/or director of a number of BNL controlled banks or financial companies in Europe, the United States and South America. He formerly served as a director of each of the Institute of International Finance Inc. in Washington DC, Compagnie Financiere Edmond de Rothschild Banque, in Paris, France, ABI—Italian Banking Association in Rome, Italy, FITD—Interbank deposit Protection Fund, in Rome, Italy, ICC International Chamber of Commerce Italian section, Rome, Italy Co-Chairman Round Table of Bankers and Small and Medium Enterprises, European Commission, in Brussels, Belgium. Mr. Lanzara has an economics degree (graduated magna cum laude) from the University of Naples, a law degree from the University of Naples and completed the Program for Management Development (PMD) at Harvard Business School.

Donald C. Trauscht, Director

Donald C. Trauscht has served as the Chairman of BW Capital Corporation, a private investment company, since 1996. From 1967 to 1995, Mr. Trauscht held a number of positions at Borg-Warner Corporation, including Chairman and Chief Executive Officer. While at Borg Warner, Mr. Trauscht supervised an annual capital budget of $250 million and was responsible for risk assessment decisions involving the company’s investments. He has participated in acquisitions, divestments, financings, public offerings and other transactions whose combined value is over $30 billion. Mr. Trauscht is a director of Esco Technologies Inc., Hydac International Corporation, Bourns Inc., and Eyes For Learning LLC. He formerly served as a director of Baker Hughes Inc., Cordant Technologies Inc., Blue Bird Corporation, Imo Industries Inc., Mannesmann Capital Corporation, Wynn International Inc., Recon Optical Inc., Global Motorsport Group Inc., OMI Corporation, IES Corporation, and NSK-Warner Ltd. He has served as the Chairman, Lead Director, and Audit Committee, Compensation Committee, and Governance Committee Chairman at numerous public and private companies.

B. Compensation

We did not pay any compensation to members of our senior executive officers in 2009. We paid an aggregate compensation of $3.0 million to our senior executive officers in 2010 for the period April 6, 2010 to December 31, 2010. We paid an aggregate compensation of $6.1 million to our senior executive officers in 2011. Executive management remuneration was as follows during these periods:

	For the year ended December 31,
	2011		2010
Short-term employee benefits (salaries)	$	2,874,864	$	2,059,907
Share-based compensation (1)		3,189,170		922,123
Total		6,064,034		2,982,030

(1) Represents restricted stock issued under the 2010 Equity Incentive Plan.  See Note 14 in the consolidated financial statements for further description. 

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Each of our non-employee directors receive cash compensation in the aggregate amount of $45,000 annually, plus an additional fee of $5,000 for each committee on which a director serves plus an additional fee of $15,000 for each committee for which a director serves as Chairman, per year, plus an additional fee of $20,000 to the lead independent director, plus reimbursements for actual expenses incurred while acting in their capacity as a director. We paid an aggregate compensation of $0.4 million to our directors in 2011. Our officers and directors are eligible to receive awards under our equity incentive plan which is described below under “—2010 Equity Incentive Plan.”

We believe that it is important to align the interests of our directors and management with that of our shareholders. In this regard, we have determined that it will generally be beneficial to us and to our shareholders for our directors and management to have a stake in our long-term performance. We expect to have a meaningful component of our compensation package for our directors and management consist of equity interests in the Company in order to provide them on an on-going basis with a meaningful percentage of ownership in the Company.

We do not have a retirement plan for our officers or directors.

2010 Equity Incentive Plan

We have adopted an equity incentive plan, which we refer to as the plan, under which directors, officers, employees, consultants and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock. We have reserved a total of 1,148,916 common shares for issuance under the plan, subject to adjustment for changes in capitalization as provided in the plan and it is not expected that any additional common shares will be reserved for issuance under our equity incentive plan prior to the third anniversary of the closing of our initial public offering. The plan is administered by our compensation committee. We issued a total of 559,458 restricted shares under the plan to our executive officers in the second quarter of 2010 which will vest in three equal installments on the third, fourth and fifth anniversaries, respectively, of the closing date of the initial public offering, which was April 6, 2010. In the second quarter of 2010, we also issued 9,000 restricted shares to our independent directors, which vested on April 6, 2011. We issued a total of 281,000 restricted shares under the plan to our executive officers in the first quarter of 2011 which will vest ratably in three equal installments on the first, second and third anniversaries, respectively, of the grant date, which was January 31, 2011. In the first quarter of 2011, we also issued 9,000 restricted shares to our independent directors, which vest on January 31, 2012. In the first quarter of 2012, we issued a total of 281,000 restricted shares under the plan to our executive officers which will vest ratably in three equal installments on the first, second and third anniversaries of the grant date, which was January 31, 2012. In the first quarter of 2012, we also issued 9,000 restricted shares to our independent directors, which vest on January 31, 2013.

Under the terms of the plan, stock options and stock appreciation rights granted under the plan will have an exercise price equal to the fair market value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from the date of grant.

The plan administrator may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of vesting, which payment may be paid in the form of cash or common shares or a combination of both, as determined by the plan administrator. The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.

Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change in control” (as defined in the plan), unless otherwise provided by the plan administrator in an award agreement, awards then outstanding will become fully vested and exercisable in full.

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Our board of directors may amend or terminate the plan and may amend outstanding awards, provided that no such amendment or termination may be made that would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors, the plan will expire ten years from the date the plan is adopted.

Employment Agreements

In April 2010, we entered into employment agreements with each of our executives. These employment agreements are in effect for a period of up to two years, and will automatically renew for the same successive employment periods unless terminated in accordance with the terms of such agreements. Pursuant to the terms of their respective employment agreements, our executives are prohibited from disclosing or unlawfully using any of our material confidential information.

Upon a change in control of the Company, the annual bonus provided under the employment agreement becomes a fixed bonus of up to 150% of the executive’s base salary. If an executive’s employment is terminated within two years of a change in control due to either disability or a reason other than “for cause,” he will be entitled to receive upon termination an assurance bonus equal to such fixed bonus and an immediate lump-sum payment in an amount equal to three times the sum of the executive’s then current base salary and the assurance bonus, and he will continue to receive all salary, compensation payment and benefits, including additional bonus payments, otherwise due to him, to the extent permitted by applicable law, for the remaining balance of his then-existing employment period. If an executive’s employment is terminated for cause or voluntarily by the employee, he shall not be entitled to any salary, benefits or reimbursements beyond those accrued through the date of his termination, unless he voluntarily terminated his employment in connection with certain conditions. Those conditions include a change in control combined with a significant geographic relocation of his office, a material diminution of his duties and responsibilities, and other conditions identified in the employment agreement.

C. Board Practices

Our board of directors currently consists of five directors, three of whom have been determined by our board of directors to be independent under the rules of the New York Stock Exchange and the rules and regulations of the SEC. Our board has an Audit Committee, a Nominating Committee and a Compensation Committee, each of which is comprised of our three independent directors, who are Messrs. Alexandre Albertini, Ademaro Lanzara and Donald Trauscht. The Audit Committee, among other things, reviews our external financial reporting, engage our external auditors and oversee our internal audit activities, procedures and the adequacy of our internal controls. In addition, provided that no member of the Audit Committee has a material interest in such transaction, the Audit Committee is responsible for reviewing transactions that we may enter into in the future with other members of the Scorpio Group that our board believes may present potential conflicts of interests between us and the Scorpio Group. The Nominating and Corporate Governance Committee is responsible for recommending to the board of directors nominees for director and directors for appointment to board committees and advising the board with regard to corporate governance practices. The Compensation Committee oversees our equity incentive plan and recommends director and senior employee compensation. Our shareholders may also nominate directors in accordance with procedures set forth in our bylaws.

D. Employees

As of December 31, 2011, we had eight employees. The commercial and operational responsibility of the Company was administered by SSM and SCM.

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E. Share Ownership

The following table sets forth information regarding the share ownership of the our common stock as of the date of this annual report by our directors and officers, including the restricted shares issued to our executive officers and to our independent directors as well as shares purchased in the open market.

Name	No. of Shares	% Owned
Emanuele A. Lauro (1)	540,151	1.4%
Robert Bugbee (2)	638,958	1.7%
Cameron Mackey (3)	319,246	0.8%
All other officers and directors individually	*	*

(1)	Includes 312,418 shares of restricted stock from the 2010 Equity Incentive Plan.
(2)	Includes 312,418 shares of restricted stock from the 2010 Equity Incentive Plan.
(3)	Includes 178,441 shares of restricted stock from the 2010 Equity Incentive Plan.
*	The remaining officers and directors individually each own less than 1% of our outstanding shares of common stock.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth information regarding beneficial ownership of our common stock for owners of more than five percent of our common stock, of which we are aware as of the date of this annual report. 

Name	Number of Shares		Percentage Owned *
Wellington Management Company, LLP (1)		5,440,268		14.2	%
Kensico Capital Management Corporation, Michael Lowenstein and Thomas J. Coleman (3)		3,515,150		9.2	%
Annalisa Lolli-Ghetti (2)		2,980,101		7.8	%
Robeco Investment Management, Inc. (4)		2,767,585		7.2	%
Allianz Global Investors Capital LLC (5)		2,331,607		6.1	%
Wellington Trust Company, NA (6)		2,286,300		6.0	%
QVT Financial LP, QVT Financial GP LLC and QVT Associates GP LLC (7)		2,091,290		5.5	%
Oceanic Hedge Fund, Oceanic Investment Management Limited, Tufton Oceanic (Isle of Man) Limited and Cato Brahde (8)		1,984,882		5.2	%
Robert Bugbee (9)		540,151		1.4	%
Emanuele A. Lauro (9)		638,958		1.7	%
Cameron Mackey (9)		319,246		0.8	%
All other officers and directors individually (9)		*		*

*Percentages based on 38,345,394 shares issued and outstanding as of March 23, 2012.

(1)	This information is derived from Schedule 13G/A filed with the SEC on February 14, 2012.
(2)	This Information is derived from a Schedule 13G/A filed with the SEC on February 14, 2012.
(3)	This Information is derived from a Schedule 13G/A filed with the SEC on February 13, 2012.
(4)	This Information is derived from a Schedule 13G/A filed with the SEC on February 6, 2012.
(5)	This Information is derived from a Schedule 13G/A filed with the SEC on February 13, 2012.
(6)	This information is derived from a Schedule 13G/A filed with the SEC on February 14, 2012.
(7)	This information is derived from a Schedule 13G/A filed with the SEC on December 27, 2011.
(8)	This information was derived from the Schedule 13G filed with the SEC on December 21, 2011.
(9)	Includes shares of restricted stock issued pursuant to our 2010 Equity Incentive Plan.
*	The remaining officers and directors individually each own less than 1% of our outstanding shares of common stock.

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B. Related Party Transactions

Administrative Services Agreement

Liberty Holding Company Ltd., or Liberty, is a Scorpio Group affiliate which provided us with administrative services pursuant to an administrative services agreement until March 13, 2012 when the administrative services agreement was assigned to SSH, a company controlled by the Lolli-Ghetti family pursuant to a novation agreement to which we were a party. The effective date of the novation was November 9, 2009, the date that we first entered into the agreement with Liberty. The administrative services provided under the agreement primarily include accounting, legal compliance, financial, information technology services, and the provision of administrative staff and office space. SSH also arranges vessel sales and purchases for us. Further, pursuant to our administrative services agreement, SSH has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt. We expect that SSH will sub-contract many of its responsibilities to other entities within the Scorpio Group.

We reimburse SSH for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. We also pay SSH a fee for arranging vessel purchases and sales for us equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. We believe this 1% fee on purchases and sales is customary in the tanker industry.

Commercial and Technical Management Agreements

As our commercial and technical managers, SCM and SSM provide us with commercial and technical services pursuant to their respective commercial and technical management agreements with us. We expect to enter into similar agreements with respect to each vessel we acquire going forward. Commercial management services include securing employment, on both spot market and time charters, for our vessels. When we employ a vessel on the spot charter market, we generally place such vessel in a tanker pool managed by our commercial manager that pertains to that vessel’s size class. Technical management services include day-to-day vessel operation, performing general maintenance, monitoring regulatory and classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. We pay our managers fees for these services and reimburse our managers for the reasonable direct or indirect expenses they incur in providing us with these services.

We pay management fees to our commercial manager, SCM, a related party within the Scorpio Group. In the years ended December 31, 2009 certain of the expenses incurred for commercial management services were under management agreements with other Scorpio Group entities, which were also related parties. Since agreements with related parties are by definition not at arm’s length, the expenses incurred under these agreements may have been different than the historical costs incurred if the subsidiaries had operated as unaffiliated entities during prior periods. Our estimates of any differences between historical expenses and the expenses that may have been incurred had the subsidiaries been stand-alone entities have been disclosed in the notes to the historical combined financial statements included elsewhere in this filing. In December 2009, we entered into new commercial management agreements with SCM for each of our vessels, each for a period of three years and which may be terminated upon two years’ notice. Pursuant to these agreements, since December 1, 2009, we pay SCM as our commercial manager a fee of $250 per vessel per day for each post-Panamax/LR1/LR2 vessels and $300 per vessel per day for each Handymax and MR vessel, plus a 1.25% commission per charter fixture when SCM provides commercial management services for vessels that are not in any of the Scorpio Group Pools. The Scorpio Aframax Tanker Pool, Scorpio LR2 Pool, Scorpio Panamax Tanker Pool and Scorpio Handymax Tanker Pool participants collectively pay SCM’s agent fee of $250 per vessel per day, with respect to post-Panamax/LR1/LR2 vessels, or $300 per vessel per day, with respect to Handymax vessels, plus a 1.25% commission per charter fixture. These are the same fees that SCM charges other vessels in these pools, including third party owned vessels.

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Additionally, we pay our technical manager, SSM, also a related party within the Scorpio Group, $548 per vessel per day to provide technical management services for each of our vessels. New technical services agreements were signed for each of our vessels in December 2009 at rates similar to the rates under the previous agreements, which were the rates that SSM charged to third parties at the time the agreement was signed.

Tanker pools

To increase vessel utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. The managers of the pools negotiate charters with customers primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers. When we employ a vessel in the spot charter market, we generally place such vessel in a tanker pool managed by our commercial manager that pertains to that vessel’s size class. The earnings allocated to vessels (charterhire expense for the pool) are aggregated and divided on the basis of a weighted scale, or Pool Points, which reflect comparative voyage results on hypothetical benchmark routes. The Pool Point system generally favors those vessels with greater cargo-carrying capacity and those with better fuel consumption. Pool Points are also awarded to vessels capable of carrying clean products and to vessels capable of trading in certain ice conditions. We currently participate in three pools: the Scorpio LR2 Tanker Pool, the Scorpio Panamax Tanker Pool and the Scorpio Handymax Tanker Pool.

SCM is responsible for the commercial management of participating vessels in the pools, including the marketing, chartering, operating and bunker (fuel oil) purchases of the vessels. The Scorpio LR2 Pool is controlled by Scorpio LR2 Pool Ltd., the Scorpio Panamax Tanker Pool is controlled by Scorpio Panamax Tanker Pool Ltd., or SPTP and the Scorpio Handymax Tanker Pool is controlled by Scorpio Handymax Tanker Pool Ltd., or SHTP. Our founder, Chairman and Chief Executive Officer is a member of the Lolli-Ghetti family which owns all issued and outstanding stock of SLR2P, SPTP and SHTP. Taking into account the recommendations of a pool committee and a technical committee, each of which is comprised of representatives of each pool participant, SLR2P, SPTP and SHTP set the respective pool policies and issues directives to the pool participants and SCM. The pool participants remain responsible for all other costs including the financing, insurance, manning and technical management of their vessels. The earnings of all of the vessels are aggregated and divided according to the relative performance capabilities of the vessel and the actual earning days each vessel is available.

Our Relationship with Scorpio Group and its Affiliates

We were incorporated in the Republic of The Marshall Islands on July 1, 2009 by Simon Financial Limited, or Simon, which is owned by the Lolli-Ghetti family and manages their shipping interests. On October 1, 2009, (i) Simon, through its then wholly owned subsidiary, Liberty Holding Company Ltd., or Liberty, transferred three operating subsidiary companies to us that owned the vessels in our initial fleet consisting of the Venice, Senatore and Noemi; (ii) Liberty Holding Company Ltd., or Liberty, became a wholly-owned subsidiary and operating vehicle of Simon; (iii) Scorpio Owning Holding Ltd. became a wholly-owned subsidiary of Liberty; and (iv) we became a wholly-owned subsidiary of Scorpio Owning Holding Ltd. Liberty’s operations include chartered-in vessels, and interests in joint ventures and investments. Scorpio Group does not have an ownership interest in any tanker vessels other than our tanker vessels, and will preclude itself from directly owning product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.

Our board of directors consists of five individuals, three of whom are independent directors. The three independent directors form the board’s Audit Committee and, pursuant to the Audit Committee charter, are required to review all potential conflicts of interest between us and Scorpio Group. The two non-independent directors, Emanuele Lauro and Robert Bugbee, serve in senior management positions within the Scorpio Group which is also our Administrator, and is an affiliate of the Scorpio Group.

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The Scorpio Group is owned and controlled by the Lolli-Ghetti family, of which Mr. Lauro is a member. Mr. Lauro is considered to be the acting Chief Executive Officer and Mr. Bugbee is considered to be the acting President of the Scorpio Group. Mr. Lauro is employed by Scorpio Commercial Management and Mr. Bugbee is employed by Scorpio USA, and both entities are affiliates within the Scorpio Group. Mr. Bugbee and Mr. Mackey have a stock ownership interest of 1.75 and 1.25%, respectively, in Liberty, an affiliate of the Scorpio Group, but neither Mr. Lauro, Mr. Bugbee nor Mr. Mackey have any other ownership interests in the Scorpio Group. We are not affiliated with any other entities in the shipping industry other than those that are members of the Scorpio Group.

In January 2011, Scorpio Owning Holding Ltd. distributed its shares in Scorpio Tankers Inc. (via a dividend) to the shareholders of Liberty, which is 97% owned by Lolli-Ghetti family, of which our CEO and Chairman is a member.

SCM and SSM, which as noted previously are affiliates of Scorpio Group, provide commercial and technical management services to us pursuant to our commercial and technical management agreements. Under the commercial management agreement, we pay SCM a fee of 1.25% commission per charter fixture plus $250 per vessel per day for Panamax, LRI, and LR2 vessels and $300 per vessel per day for Handymax and MR vessels for vessels that do not participate in one of the Scorpio Group Pools. For vessels operating in a Scorpio Group Pool, we pay a fee of 1.25% commission per charter fixture plus $250 per vessel per day for Panamax, LRI, and LR2 vessels and $300 per vessel per day for Handymax vessels. We pay SSM $548 per vessel per day to provide technical management services for each of our vessels. We have entered into separate commercial and technical management agreements for each of our vessels and expect to enter into similar agreements with respect to each vessel that we acquire going forward. The commercial and technical management agreements with SCM and SSM are each for a period of three years, and may be terminated upon two years’ notice.

We will reimburse SSH, which as noted previously is our Administrator and also an affiliate of the Scorpio Group, for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. We will also pay our Administrator a fee for arranging vessel purchases and sales for us equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. We believe this 1% fee on purchases and sales is customary in the tanker industry.

Pursuant to our administrative services agreement, SSH, on behalf of itself and other members of the Scorpio Group, has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt. We have no other agreements with SCM, SSM, our Administrator, or any other party providing for a resolution of potential conflicts in our favor.

For further details about our relationship and agreements with the Scorpio Group and its affiliates, please read “Related Party Transactions” and “Management—Board of Directors and Committees.”

Related Party Payable and Shareholder Payable

Prior to November 18, 2009, we had a shareholder payable of $18.9 million and a related party payable to a subsidiary of Liberty of $27.4 million. On November 30, 2009, these payables were converted to equity as a capital contribution with no shares being exchanged in this transaction.

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Transactions with subsidiaries of Simon

Transactions with subsidiaries of Simon (herein referred to as Simon subsidiaries) and transactions with entities outside of Simon but controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated statements of profit or loss and balance sheet are as follows:

	For the year
	ended December 30,
	2011			2010			2009
Pool revenue(1)
Scorpio Panamax Tanker Pool Limited		22,593,663			9,645,173			10,415,332
Scorpio Handymax Tanker Pool Limited		32,237,901			5,177,805			—
Scorpio LR2 Pool Limited		5,194,689			—			—
Scorpio Aframax Tanker Pool Limited		170,224			641,278			—
Time charter revenue(2)
King Dustin		8,507,042			8,700,195			8,288,767
Liberty and subsidiaries		—			4,779,605			—
Vessel operating costs(3)		(2,202,870	)		(1,058,699	)		(600,000	)
Commissions(4)		(270,069	)		(233,546	)		—
General and administrative expenses(5)		(1,936,567	)		(932,460	)		(344,162	)
Other(6)		—			(130,602	)		—

(1)	These transactions relate to revenue earned in the Scorpio Panamax, Scorpio LR2, Scorpio Aframax and Scorpio Handymax Tanker Pools (the Pools).  The Pools are operated by Scorpio Panamax Tanker Pool Limited, Scorpio LR2 Tanker Pool Limited, Scorpio Aframax Pool Limited, and Scorpio Handymax Tanker Pool Limited.
(2)	The revenue earned was for Noemi's time charter with King Dustin (which is 50% jointly controlled by a Simon subsidiary). In 2010, the STI Harmony and STI Heritage were on a time charter with Liberty, a Simon subsidiary.
(3)	These transactions represent technical management fees charged by SSM, a related party affiliate, and included in the vessel operating costs in the consolidated profit or loss statement.  We believe our technical management fees for the years ended December 31, 2011, 2010 and 2009 were at market rates because they were the same rates charged to other vessels managed by SSM. Each vessel pays $548 per day for technical management, which is, as noted, consistent with that charged to third parties by SSM.
(4)	These transactions represent the expense due to SCM for commissions related to the commercial management services provided by SCM under the Commercial Management Agreement (see description below).  Each of the vessels pays a commission of 1.25% of their revenue when not in the Pools.  When our vessels are in the Pools, SCM, the pool manager, charges all vessels in the Pools (including third party participants) a commission of 1.25% of their revenue and $250 per day for Panamax/LR1 and Aframax/LR2 vessels and $300 per day for Handymax vessels.  We believe that the commercial management agreement represents a market rate for such services.
	There were no charges related to these services for the year ended December 31, 2009.   We estimate that the commissions on its fees for years ended December 31, 2009 would have been $215,046 and would have decreased net income for the period by the same amount if we operated as an unaffiliated entity.  Our estimate is based upon the rates charged by SCM to third party participants in the pools for 2009.
(5)	We pay our administrator (Liberty) a fixed monthly fee calculated at cost with no profit for providing us with administrative services, and reimburse it for the reasonable direct or indirect expenses it incurs in providing us with such services.  SSM provided administrative services to us under this agreement until September 30, 2010.  From October 1, 2010, SCM has provided us administrative services under this agreement.  The administrative fee included services provided to us for accounting, administrative, information technology and management.
	Our Commercial Management Agreement with SCM includes a daily flat fee charged payable to SCM for the vessels that are not in one of the pools managed by SCM.  The flat fee is $250 per day for Panamaxes/LR1 and Aframax/LR2 vessels and $300 per day for Handymax and MR vessels.  The flat fee is the same rate charged by SCM for vessels in the pools managed by SCM.

· The expense for the year ended December 31, 2011 of $1,936,567 included the flat fee of $268,331 charged by SCM and administrative fees of $1,668,236 charged by Liberty and are both included in general and administrative expenses in the consolidated profit or loss statement. 

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· The expense for the year ended December 31, 2010 of $932,460 included the flat fee of $203,405 charged by SCM and administrative fees of $729,055 charged by Liberty and are both included in general and administrative expenses in the consolidated profit or loss statement. 

· The expense for the year ended December 31, 2009 of $344,162 included fees of $70,418 charged by SCM and $273,744 charged by SSM for administrative services under the previous administrative agreement.  The fees charged by SCM for the year ended December 31, 2009 were not at market rates.  We estimate the fees charged by SCM for the year ended December 31, 2009 would have been $182,500 and would have decreased net income by $112,082.

⁽⁶⁾ In accordance with our Administrative Services Agreement with Liberty, we have to reimburse Liberty for any direct expenses.  These transactions represent reimbursements of $130,602 to Liberty for the year ended December 31, 2010 for expenses related to the registration of the existing shares in the initial public offering which closed on April 6, 2010.  In addition, $344,490 related to expenses for the registration of the shares in the initial public offering were recorded as an offset against the proceeds from the offering. The cash payment was made in 2010.

· Furthermore, the Administrative Services Agreement with Liberty includes a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. These fees are capitalized as part of the carrying value of the related vessel. In the year ended December 31, 2011, we paid Liberty an aggregate fee of $700,000 in May 2011 for the purchase of the STI Coral and STI Diamond. In the year ended December 31, 2010, we paid Liberty an aggregate fee of $2.4 million for the purchases of the STI Harmony, STI Heritage, STI Conqueror, STI Matador, STI Gladiator, STI Highlander and STI Spirit.

Balances with related parties

We had the following balances with related parties which have been included in the consolidated balance sheets:

	As of December 31,
	2011		2010
Assets:
Accounts receivable (due from the Pools)	$	18,102,105	$	6,767,770
Accounts receivable (SSM)		—		117
Accounts receivable (SCM)		—		3,463
Liabilities:
Accounts payable (owed to the Pools)		50,120		22,349
Accounts payable (SSM)		8,191		101,412
Accounts payable (SCM)		51,994		—

In 2011, the Company also entered into an agreement to reimburse costs to SSM as part of its supervision agreement for newbuilding vessels. No amounts have been charged under this agreement as of December 31, 2011.

Key management remuneration

Prior to April 6, 2010, our executive management services were provided by a related party affiliate and included in the management fees described in (5) above. If we were not part of Simon, and had the same ownership structure and a contract for administrative services for the periods up to April 6, 2010, we estimate our executive management remuneration would have been comparable with the executive management remuneration presented within general and administrative expenses in subsequent periods. The table below therefore depicts key management remuneration for the periods April 6, 2010 through December 31, 2010 and the year ended December 31, 2011 as follows:

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	As of December 31,
	2011		2010
Short-term employee benefits (salaries)	$	2,874,864	$	2,059,907
Share-based compensation  (1)		3,189,170		922,123
Total		6,064,034		2,982,030

(1) Represents the amortization of restricted stock issued under our equity incentive plans in June 2010 and January 2011. 

There are no post employment benefits.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See ITEM 18.

Legal Proceedings

To our knowledge, we are not currently a party to any lawsuit that, if adversely determined, would have a material adverse effect on our financial position, results of operations or liquidity. As such, we do not believe that pending legal proceedings, taken as a whole, should have any significant impact on our financial statements. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. While we expect that these claims would be covered by our existing insurance policies, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had, a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.

Dividend Policy

Since our initial public offering closed on April 6, 2010, we have not paid a dividend. We will continue to assess our dividend policy and our board of directors may determine to pay dividends in the future. Depending on prevailing charter market conditions, our operating results and capital requirements and other relevant factors, our board of directors may re-evaluate our dividend policy. In addition, Marshall Islands law generally prohibits the payment of dividends other than from surplus or when a company is insolvent or if the payment of the dividend would render the company insolvent. Any future dividend payments will be subject to determination by our board of directors in its discretion.

B. Significant Changes

See ITEM 18 – Financial Statements: Note 24 – Subsequent Events.

ITEM 9. THE OFFER AND LISTING

Share History and Markets

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Since our initial public offering, our shares have traded on the New York Stock Exchange (NYSE) under the symbol STNG. The high and low market prices for our common stock for the periods set forth below were as follows:

For the Year Ended	High		Low
December 31, 2010	$	13.01	$	9.50
December 31, 2011		12.18		4.28
For the Quarter Ended		High		Low
March 31, 2010	$	12.90	$	12.10
June 30, 2010		13.01		10.05
September 30, 2010		11.92		10.04
December 31, 2010		11.95		9.50
March 31, 2011		10.82		9.62
June 30, 2011		12.18		9.25
September 30, 2011		10.08		4.93
December 31, 2011		7.03		4.28
Most Recent Six Months		High		Low
September 2011	$	7.33	$	4.69
October 2011		6.70		4.69
November 2011		7.03		5.55
December 2011		5.43		4.28
January 2012		5.93		4.93
February 2012		6.47		5.57
March 2012		7.29		6.33

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable

B. Memorandum and articles of association

Our amended and restated articles of incorporation have been filed as exhibit 3.1 to our Amendment No. 2 to our Registration Statement on Form F-1 (Registration No. 333-164940), filed with the SEC on March 18, 2010. Our amended and restated bylaws are filed as exhibit 1.2 to our Annual Report on Form 20-F filed on June 29, 2010. The information contained in these exhibits is incorporated by reference herein.

Information regarding the rights, preferences and restrictions attaching to each class of the shares is described in the section entitled “Description of Capital Stock” in our Prospectus Supplement on Form 424B5, filed with the SEC on December 5, 2011, as set forth in the accompanying prospectus dated May 10, 2011, which supplements our Registration Statement on Form F-3 (Registration No. 333-173929) with an effective date of May 10, 2011, provided that since the date of that Prospectus Supplement, our total issued and outstanding common shares has increased to 38,345,394 as of the date of this Annual Report.

C. Material Contracts

Attached as exhibits to this annual report are the contracts we consider to be both material and not entered into in the ordinary course of business. Descriptions are included within ITEM 5.B with respect to our credit facilities, and ITEM 7.B with respect to our related party transactions.

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Other than these contracts, we have no other material contracts, other than contracts entered into in the ordinary course of business, to which the Company is a party.

D. Exchange Controls

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common shares.

E. Taxation

Marshall Islands Tax Considerations

The following are the material Marshall Islands tax consequences of our activities to us and holders of our common shares. We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders.

United States Federal Income Tax Considerations

The following are the material United States federal income tax consequences to us of our activities and to United States Holders and Non-United States Holders, each as defined below, of the ownership of common shares. The following discussion of United States federal income tax matters is based on the United States Internal Revenue Code of 1986, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all of which are subject to change, possibly with retroactive effect. The discussion below is based, in part, on the description of our business in this Report and assumes that we conduct our business as described herein. References in the following discussion to the “Company,” “we,” “our” and “us” are to Scorpio Tankers Inc. and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of Operating Income: In General

We earn and anticipate that we will continue to earn substantially all our income from the hiring or leasing of vessels for use on a time charter basis, from participation in a pool or from the performance of services directly related to those uses, all of which we refer to as “shipping income.”

Unless exempt from United States federal income taxation under the rules of Section 883 of the Code, or Section 883, as discussed below, a foreign corporation such as the Company will be subject to United States federal income taxation on its “shipping income” that is treated as derived from sources within the United States, which we refer to as “United States source shipping income.” For United States federal income tax purposes, “United States source shipping income” includes 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

Shipping income attributable to transportation exclusively between non-United States ports will be considered to be 100% derived from sources entirely outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.

Shipping income attributable to transportation exclusively between United States ports is considered to be 100% derived from United States sources. However, we are not permitted by United States law to engage in the transportation of cargoes that produces 100% United States source shipping income.

Unless exempt from tax under Section 883, our gross United States source shipping income would be subject to a 4% tax imposed without allowance for deductions, as described more fully below.

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Exemption of Operating Income from United States Federal Income Taxation

Under Section 883 and the Treasury Regulations thereunder, a foreign corporation will be exempt from United States federal income taxation on its United States source shipping income if:

(1) it is organized in a “qualified foreign country,” which is one that grants an “equivalent exemption” from tax to corporations organized in the United States in respect of each category of shipping income for which exemption is being claimed under Section 883; and

(2) one of the following tests is met:

(A) more than 50% of the value of its shares is beneficially owned, directly or indirectly, by “qualified shareholders,” which as defined includes individuals who are “residents” of a qualified foreign country, which we refer to as the “50% Ownership Test” or

(B) its shares are “primarily and regularly traded on an established securities market” in a qualified foreign country or in the United States, to which we refer as the “Publicly-Traded Test”.

The Republic of The Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are incorporated, has been officially recognized by the United States Internal Revenue Service, or the IRS, as a qualified foreign country that grants the requisite “equivalent exemption” from tax in respect of each category of shipping income we earn and currently expect to earn in the future. Therefore, we will be exempt from United States federal income taxation with respect to our United States source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.

For our 2011 tax year, we intend to take the position that we satisfy the Publicly-Traded Test and we anticipate that we will continue to satisfy the Publicly-Traded Test for future taxable years. However, as discussed below, this is a factual determination made on an annual basis. We do not currently anticipate a circumstance under which we would be able to satisfy the 50% Ownership Test.

Publicly-Traded Test

The Treasury Regulations under Section 883 provide, in pertinent part, that shares of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Our common shares, which constitute our sole class of issued and outstanding stock, are “primarily traded” on the New York Stock Exchange, or the NYSE.

Under the Treasury Regulations, our common shares will be considered to be “regularly traded” on an established securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes of stock entitled to vote and total value, are listed on such market, to which we refer as the “Listing Threshold.” Since our common shares are listed on the NYSE, we expect to satisfy the Listing Threshold.

It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, or the “Trading Frequency Test” and (ii) the aggregate number of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the “Trading Volume Test.” The Company currently satisfies and anticipates that it will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.

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Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market for any taxable year during which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of outstanding shares, to which we refer as the “5% Override Rule.”

For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or “5% Shareholders,” the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the SEC, as owning 5% or more of our common shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if we can establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half the number of days during the taxable year. In order to benefit from this exception to the 5% Override Rule, the Company must satisfy certain substantiation requirements in regards to the identity of its 5% Shareholders.

Based on Schedule 13G and Schedule 13D filings with the SEC, the Company believes that the 5% Override Rule may have been triggered for the 2011 taxable year, in which case the Company will not satisfy the Publicly-Traded Test for the 2011 taxable year unless within the group of our 5% Shareholders there were sufficient qualified 5% Shareholders to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than half the number of days during the 2011 taxable year. We believe that, during the 2011 taxable year, there existed sufficient qualified 5% Shareholders for the Company to avail itself of this exception to the 5% Override Rule. The Company intends to take this position on its United Sates federal income tax return for the 2011 taxable year and expects that it will be able to satisfy the substantiation requirements in regards to its 5% Shareholders.

Accordingly, we believe that we currently satisfy the Publicly-Traded Test. However, there are factual circumstances beyond our control that could cause us to lose the benefit of the Section 883 exemption. For example, if we trigger the 5% Override Rule for any future taxable year, there is no assurance that we will have sufficient qualified 5% Shareholders to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than half the number of days during such taxable year, or that we will be able to satisfy the substantiation requirements in regards to our 5% Shareholders.

United States Federal Income Taxation In Absence of Section 883 Exemption

If the benefits of Section 883 are unavailable, our United States source shipping income would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the “4% gross basis tax regime,” to the extent that such income is not considered to be “effectively connected” with the conduct of a United States trade or business, as described below. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being United States source shipping income, the maximum effective rate of United States federal income tax on our shipping income would never exceed 2% under the 4% gross basis tax regime.

To the extent our United States source shipping income is considered to be “effectively connected” with the conduct of a United States trade or business, as described below, any such “effectively connected” United States source shipping income, net of applicable deductions, would be subject to United States federal income tax, currently imposed at rates of up to 35%. In addition, we would generally be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our United States trade or business.

Our United States source shipping income would be considered “effectively connected” with the conduct of a United States trade or business only if:

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we have, or are considered to have, a fixed place of business in the United States involved in the earning of United States source shipping income; and

substantially all of our United States source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not currently have, intend to have, or permit circumstances that would result in having, any vessel sailing to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, it is anticipated that none of our United States source shipping income will be “effectively connected” with the conduct of a United States trade or business.

United States Federal Income Taxation of Gain on Sale of Vessels

If we qualify for exemption from tax under Section 883 in respect of the shipping income derived from the international operation of our vessels, then gain from the sale of any such vessel should likewise be exempt from United States federal income tax under Section 883. If, however, our shipping income from such vessels does not for whatever reason qualify for exemption under Section 883, then any gain on the sale of a vessel will be subject to United States federal income tax if such sale occurs in the United States. To the extent possible, we intend to structure the sales of our vessels so that the gain therefrom is not subject to United States federal income tax. However, there is no assurance we will be able to do so.

United States Federal Income Taxation of United States Holders

The following is a discussion of the material United States federal income tax considerations relevant to an investment decision by a United States Holder, as defined below, with respect to our common shares. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, some of which may be subject to special rules. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common shares.

As used herein, the term “United States Holder” means a beneficial owner of common shares that is an individual United States citizen or resident, a United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common shares to a United States Holder will generally constitute dividends to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of such earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder’s tax basis in his common shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

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Dividends paid on our common shares to a United States Holder who is an individual, trust or estate (a “United States Non-Corporate Holder”) will generally be treated as “qualified dividend income” that is taxable to such United States Non-Corporate Holder at preferential tax rates (through 2012) provided that (1) the common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which, as discussed below, we have not been, are not and do not anticipate being in the future); (3) the United States Non-Corporate Holder has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) the United States Non-Corporate Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.

Legislation has been previously introduced in the United States Congress which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of its enactment. Further, in the absence of legislation extending the term of the preferential tax rates for qualified dividend income, all dividends received by a taxpayer in tax years beginning on January 1, 2013 or later will be taxed at ordinary graduated tax rates. Any distributions out of earnings and profits we pay which are not eligible for these preferential rates will be taxed as ordinary income to a United States Non-Corporate Holder.

Special rules may apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder’s adjusted tax basis in his common shares—paid by us. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income,” then any loss derived by a United States Non-Corporate Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or Other Disposition of Common Shares

Assuming we do not constitute a passive foreign investment company for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder’s tax basis in such shares. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for United States foreign tax credit purposes. Long-term capital gains of United States Non-Corporate Holders are currently eligible for reduced rates of taxation. A United States Holder’s ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a United States Holder that holds shares in a foreign corporation classified as a “passive foreign investment company”, or a PFIC, for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a United States Holder if, for any taxable year in which such Holder holds our common shares, either:

· at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

· at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income.

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

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Based on our current operations and future projections, we do not believe that we have been, are, nor do we expect to become, a passive foreign investment company with respect to any taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Accordingly, such income should not constitute passive income, and the assets that we own and operate in connection with the production of such income, in particular, the vessels, should not constitute assets that produce or are held for the production of passive income for purposes of determining whether we are a PFIC. Therefore, based on our current operations and future projections, we should not be treated as a PFIC with respect to any taxable year. There is substantial legal authority supporting this position, consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority that characterizes time charter income as rental income rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. Furthermore, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder would be subject to different United States federal income taxation rules depending on whether the United States Holder makes an election to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF election.” As an alternative to making a QEF election, a United States Holder should be able to make a “mark-to-market” election with respect to our common shares, as discussed below. In addition, if we were to be treated as a PFIC for any taxable year after 2010, a United States Holder would be required to file an annual report with the IRS for that year with respect to such Holder’s common shares.

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder we refer to as an “Electing Holder,” the Electing Holder must report for United States federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for each taxable year of the Company during which it is a PFIC that ends with or within the taxable year of the Electing Holder, regardless of whether distributions were received from us by the Electing Holder. No portion of any such inclusions of ordinary earnings will be treated as “qualified dividend income.” Net capital gain inclusions of United States Non-Corporate Holders would be eligible for preferential capital gain tax rates. The Electing Holder’s adjusted tax basis in the common shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common shares and will not be taxed again once distributed. An Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with respect to any taxable year. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares. A United States Holder would make a timely QEF election for our shares by filing one copy of IRS Form 8621 with his United States federal income tax return for the first year in which he held such shares when we were a PFIC. If we were to be treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary information in order to make the QEF election described above.

Taxation of United States Holders Making a “Mark-to-Market” Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate will be the case, our common shares are treated as “marketable stock,” a United States Holder would be allowed to make a “mark-to-market” election with respect to our common shares, provided the United States Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common shares at the end of the taxable year over such Holder’s adjusted tax basis in the common shares. The United States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States Holder’s adjusted tax basis in the common shares over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A United States Holder’s tax basis in his common shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the United States Holder.

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Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a PFIC for any taxable year, a United States Holder who does not make either a QEF election or a “mark-to-market” election for that year, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on the common shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized on the sale, exchange or other disposition of our common shares. Under these special rules:

the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common shares;

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, would be taxed as ordinary income and would not be “qualified dividend income” and

the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

United States Federal Income Taxation of “Non-United States Holders”

A beneficial owner of common shares (other than a partnership) that is not a United States Holder is referred to herein as a “Non-United States Holder.”

If a partnership holds common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.

Dividends on Common Stock

A Non-United States Holder generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to his common shares, unless that income is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is subject to United Stated federal income tax only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States.

Sale, Exchange or Other Disposition of Common Shares

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common shares, unless:

· the gain is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States (and, if the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-United States Holder in the United States); or

· the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

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If the Non-United States Holder is engaged in a United States trade or business for United States federal income tax purposes, dividends on the common shares, and gains from the sale, exchange or other disposition of such shares, that are effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of United States Holders. In addition, if you are a corporate Non-United States Holder, your earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional “branch profits” tax at a rate of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements if you are a non-corporate United States Holder. Such payments or distributions may also be subject to backup withholding if you are a non-corporate United States Holder and you:

· fail to provide an accurate taxpayer identification number;

· are notified by the IRS that you have failed to report all interest or dividends required to be shown on your United States federal income tax returns; or

· in certain circumstances, fail to comply with applicable certification requirements.

Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If you are a Non-United States Holder and you sell your common shares to or through a United States office of a broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless you certify that you are a non-United States person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your common shares through a non-United States office of a broker that is a United States person or has some other contacts with the United States. Such information reporting requirements will not apply, however, if the broker has documentary evidence in its records that you are a non-United States person and certain other conditions are met, or you otherwise establish an exemption.

Backup withholding is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your United States federal income tax liability by filing a refund claim with the IRS.

Pursuant to recently enacted legislation, individuals who are United States Holders (and to the extent specified in applicable Treasury Regulations, certain individuals who are Non- United States Holders and certain United States entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury regulations). Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintained with a United States financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event an individual United States Holder (and to the extent specified in applicable Treasury Regulations, an individual Non- United States Holder or a United States entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of United States federal income taxes of such holder for the related tax year may not close until three years after the date that the required IRS Form 8938 is filed. United States Holders (including United States entities) and Non- United States Holders are encouraged consult their own tax advisors regarding their reporting obligations under this legislation.

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F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the Commission at 100 F Street, N.E. Washington, D.C. 20549, or from the SEC’s website http://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Interest Rate Risk

We are exposed to the impact of interest rate changes primarily through our unhedged variable-rate borrowings. Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. From time to time, we will use interest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our variable-rate debt and is not for speculative or trading purposes. We had one interest rate swap which expired in April 2010 when the 2005 Credit Facility was repaid. Currently, we have six interest rate swaps scheduled to start on July 1, 2012 for an aggregate notional amount of $75 million. The fair market value of our interest rate swaps was a liability of $0.7 million at December 31, 2011.

Based on the floating rate debt at December 31, 2011, a one-percentage point increase in the floating interest rate would increase interest expense by $1.5 million per year. The following table presents the due dates for the principal payments on our fixed and floating rate debt:

	As of December 31, 2011
			2013-		2015-
	2012		2014		2016		Thereafter
Principal payments floating rate debt (unhedged)	$	2,009,004	$	10,998,300	$	54,894,461	$	—
Principal payments fixed rate debt (hedged)		2,236,537		8,441,350		33,687,121		38,577,758
Total principal payments on outstanding debt	$	4,245,541	$	19,439,650	$	88,581,582	$	38,577,758

Spot Market Rate Risk

The cyclical nature of the tanker industry causes significant increases or decreases in the revenue that we earn from our vessels, particularly those vessels that operate in the spot market or participate in pools that are concentrated in the spot market such as the Scorpio Group Pools. We currently do not have any vessels on time charter contracts. Additionally, we have the ability to remove our vessels from the pools on relatively short notice if attractive time charter opportunities arise.

96

Foreign Exchange Rate Risk

Our primary economic environment is the international shipping market. This market utilizes the U.S. Dollar as its functional currency. Consequently, virtually all of our revenues and the majority of our operating expenses are in U.S. Dollars. However, we incur some of our combined expenses in other currencies, particularly the Euro. The amount and frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period. Depreciation in the value of the U.S. dollar relative to other currencies will increase the U.S. dollar cost of us paying such expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations.

There is a risk that currency fluctuations will have a negative effect on our cash flows. We have not entered into any hedging contracts to protect against currency fluctuations. However, we have some ability to shift the purchase of goods and services from one country to another and, thus, from one currency to another, on relatively short notice. We may seek to hedge this currency fluctuation risk in the future.

Inflation

We do not expect inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The Company’s controls and procedures are designed to provide reasonable assurance of achieving their objectives.

We carried out an evaluation under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15e under the Securities Act of 1934) as of December 31, 2011. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2011 to provide reasonable assurance that (1) information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

97

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

B. Management’s Annual Report on Internal Control Over Financial Reporting.

In accordance with Rule 13a-15(f) of the Securities Exchange Act of 1934, the management of Scorpio Tankers Inc. and its subsidiaries (the “Company”) is responsible for the establishment and maintenance of adequate internal controls over financial reporting for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management has performed an assessment of the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2011 based on the provisions of Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management determined that the Company’s internal controls over financial reporting was effective as of December 31, 2011 based on the criteria in Internal Control—Integrated Framework issued by COSO.

The Company’s internal control over financial reporting, at December 31, 2011, has been audited by Deloitte LLP, an independent registered public accounting firm, who also audited the Company’s consolidated financial statements. Their audit report on the effectiveness of internal control over financial reporting is presented below.

C. Attestation Report of the Registered Public Accounting Firm.

To the Board of Directors and Shareholders of Scorpio Tankers Inc.

Majuro, Marshall Island

We have audited the internal control over financial reporting of Scorpio Tankers Inc. and subsidiaries (the "Company") as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

98

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2011 of the Company and our report dated March 23, 2012 expressed an unqualified opinion on those financial statements.

DELOITTE LLP

London, United Kingdom

March 23, 2012

D. Changes in Internal Control Over Financial Reporting.

None

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that Mr. Ademaro Lanzara, who serves as chair of the Audit Committee, qualifies as an “audit committee financial expert” and that he is “independent” according to Securities and Exchange Commission rules.

ITEM 16B. CODE OF ETHICS

We have adopted a code of ethics applicable to officers, directors and employees. Our code of ethics complies with applicable guidelines issued by the SEC and was previously filed as an exhibit to this annual report.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

A. Audit Fees

Our principal accountant for fiscal years ended December 31, 2011, 2010 and 2009 was Deloitte LLP (London, United Kingdom), and the audit fees for those periods were $380,174, $218,167 and $155,338, respectively.

B. Audit-Related Fees

During 2010 our principal accountant provided audit related services for Sarbanes-Oxley readiness. Fees for those services were $30,500.

C. Tax Fees

None.

D. All Other Fees

During 2011, our principal accountant provided services related to our F-3 shelf registration and follow-on offerings which were completed on May 10, 2011, May 18, 2011 and December 6, 2011, respectively. The fees for these services were $28,982, $72,896 and $86,206, respectively. During 2010, our principal accountant provided services related to the initial public offering and follow-on offering, which were completed on April 16, 2010 and November 22, 2010, respectively. The fees for these services were $313,532 and $249,658, respectively.

99

E. Audit Committee’s Pre-Approval Policies and Procedures

Our Audit Committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services.

F. Audit Work Performed by Other Than Principal Accountant if Greater Than 50%

Not applicable.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On July 9, 2010, the board of directors authorized a share buyback program of $20 million. We repurchase these shares in the open market at the time and prices that we consider to be appropriate. As of December 31, 2011, 723,665 shares have been purchased under the plan at an average price of $7.5981 per share, including commissions. The amounts purchased, by month, are set out in the table below:

Issuer Purchases of Equity Securities
Period	(A) Total Number of Shares Purchased		(B) Average Price Paid Per Shares		( C ) Total Number of Shares Purchased as Part of Publicly Announced Programs		(D) Maximum Amount in US $ million that may Yet Be Expected on Share Repurchases Under Programs
June 2011		23,319	$	9.53		23,319	$	17,130,002
July 2011
August 2011		18,870	$	6.02		18,870	$	17,016,383
September 2011		209,006	$	6.04		209,006	$	15,753,148
October 2011		228,324	$	5.48		228,324	$	14,501,507
Total		723,665	$	7.60		723,665	$	14,501,507

Officers and directors acquired 302,456 shares during 2011.

** A member of the Lolli-Ghetti Family acquired 700,000 shares in May 2011 in our underwritten public offering.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

100

ITEM 16G. CORPORATE GOVERNANCE

Pursuant to an exception for foreign private issuers, we, as a Marshall Islands company, are not required to comply with the corporate governance practices followed by U.S. companies under the NYSE listing standards. We believe that our established practices in the area of corporate governance are in line with the spirit of the NYSE standards and provide adequate protection to our shareholders. In this respect, we have voluntarily adopted NYSE required practices, such as (i) having a majority of independent directors, (ii) establishing audit, compensation and nominating committees and (iii) adopting a Code of Ethics.

There are two significant differences between our corporate governance practices and the practices required by the NYSE. The NYSE requires that non-management directors meet regularly in executive sessions without management. The NYSE also requires that all independent directors meet in an executive session at least once a year. The Marshall Islands law and our bylaws do not require our non-management directors to regularly hold executive sessions without management.  During 2011 and through the date of this annual report, our non-management directors met in executive session three times. The NYSE requires companies to adopt and disclose corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and an annual performance evaluation. We are not required to adopt such guidelines under Marshall Islands law and we have not adopted such guidelines.

Item 16H. Mine Safety Disclosure

Not applicable

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable

ITEM 18. FINANCIAL STATEMENTS

The financial information required by this Item is set forth on pages F-1 to F-39 and is filed as part of this annual report.

ITEM 19. EXHIBITS

Exhibit Number	Description
1.1	Amended and Restated Articles of Incorporation of the Company (1)
1.2	Amended and Restated Bylaws of the Company (3)
2.1	Form of Stock Certificate (1)
2.2	Form of Senior Debt Securities Indenture (5)
2.3	Form of Subordinated Debt Securities Indenture (5)
4.1	Amended and Restated Loan Agreement for $150 Million Revolving Credit Facility, dated July 12, 2011
4.2	Letter Agreement to July 12, 2011 Amended and Restated Loan Agreement, dated September 22, 2011
4.3	First Amendatory Agreement to July 12, 2011 Amended and Restated Loan Agreement, dated December 22, 2011
4.4	2010 Equity Incentive Plan (3)
4.5	Administrative Services Agreement between the Company and Liberty Holding Company Ltd. (2)

101

Exhibit Number	Description
4.6	Form of Commercial Management Agreement with SCM (2)
4.7	Form of Technical Management Agreement with SSM  (2)
4.8	Loan Agreement for STI Spirit, dated March 9, 2011 (4)
4.9	Letter Agreement to March 9, 2011 Loan Agreement, dated September 28, 2011
4.10	First Amendatory Agreement to March 9, 2011 Loan Agreement, dated December 30, 2011
4.11	Loan Agreement for $150 Million Term Loan Credit Facility, dated May 3, 2011
4.12	Letter Agreement to May 3, 2011 Loan Agreement, dated September 22, 2011
4.13	First Amendatory Agreement to May 3, 2011 Loan Agreement, dated June 27, 2011
4.14	Second Amendatory Agreement to May 3, 2011 Loan Agreement, dated December 22, 2011
4.15	Loan Agreement for a $92,000,000 Term Loan Credit Facility, dated December 21, 2011
8.1	Subsidiaries of the Company
11.1	Code of Ethics (3)
11.2	Whistleblower Policy
12.1	Rule 13a-14(a)/15d-14(a) Certification of  Principal  Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
13.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of  Principal  Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Independent Registered Public Accounting Firm
15.2	Consent of Drewry Shipping Consultants, Ltd.

(1)	Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 1) (File No. 333-164940) on March 10, 2010.
(2)	Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 2) (File No. 333-164940) on March 18, 2010.
(3)	Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on June 29, 2010.
(4)	Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on April 21, 2011.
(5)	Filed as an Exhibit to the Company’s Registration Statement on Form F-3 (File No. 333-173929) on May 4, 2011.

102

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.

Scorpio Tankers Inc.

(Registrant)

Dated: March 23, 2012

/s/Emanuele Lauro

Emanuele Lauro

Chief Executive Officer

103

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2011 and 2010	F-3
Consolidated Statements of Profit or Loss for the years ended December 31, 2011, 2010 and 2009	F-4
Consolidated Statements of Comprehensive Loss or Income for the years ended December 31, 2011, 2010 and 2009	F-5
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2011, 2010 and 2009	F-6
Consolidated Cash Flow Statements for the years ended December 31, 2011, 2010 and 2009	F-7
Notes to the Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Scorpio Tankers Inc.

Majuro, Marshall Island

We have audited the accompanying consolidated balance sheets of Scorpio Tankers Inc. and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of profit or loss, consolidated statements of comprehensive loss or income, consolidated statements of changes in shareholders’ equity, and consolidated cash flow statements for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Scorpio Tankers Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 23, 2012 expressed an unqualified opinion on the Company's internal control over financial reporting.

DELOITTE LLP

London, United Kingdom

March 23, 2012

F-2

Scorpio Tankers Inc. and Subsidiaries

Consolidated balance sheets

December 31, 2011 and 2010

			As of
	Notes		December 31, 2011			December 31, 2010
Assets
Current assets
Cash and cash equivalents		2	$	36,833,090		$	68,186,902
Accounts receivable		3		20,385,546			7,354,252
Prepaid expenses		4		1,535,437			460,680
Inventories		5		2,696,296			1,286,507
Total current assets				61,450,369			77,288,341
Non-current assets
Vessels and drydock		6		322,457,755			333,425,386
Vessels under construction		6		60,332,870			-
Other assets		8		3,988,778			1,554,713
Total non-current assets				386,779,403			334,980,099
Total assets			$	448,229,772		$	412,268,440
Current liabilities
Bank loans		11		2,888,723			15,826,314
Accounts payable		9		11,732,427			3,173,505
Accrued expenses		10		3,376,033			1,123,351
Derivative financial instruments		12		236,987			-
Total current liabilities				18,234,170			20,123,170
Non-current liabilities
Bank loans		11		142,678,788			127,362,088
Derivative financial instruments		12		463,587			-
Total non-current liabilities				143,142,375			127,362,088
Total liabilities				161,376,545			147,485,258
Shareholders' equity
Issued, authorized and fully paid in share capital:
Share capital		14		390,691			248,791
Additional paid in capital		14		363,209,983			255,003,984
Merger reserve		14		-			13,292,496
Treasury shares		14		(5,498,495	)		(2,647,807	)
Hedging reserve		12		(700,574	)		-
Accumulated deficit		14		(70,548,378	)		(1,114,282	)
Total shareholders' equity				286,853,227			264,783,182
Total liabilities and shareholders' equity			$	448,229,772		$	412,268,440

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Scorpio Tankers Inc. and Subsidiaries

Consolidated statements of profit or loss

For the years ended December 31, 2011, 2010 and 2009

			For the year ended December 31,
	Notes		2011			2010			2009
Revenue:
Vessel revenue		16	$	82,109,691		$	38,797,913		$	27,619,041
Operating expenses:
Vessel operating costs		18		(31,369,646	)		(18,440,492	)		(8,562,118	)
Voyage expenses				(6,881,019	)		(2,542,298	)		-
Charterhire		17		(22,750,257	)		(275,532	)		(3,072,916	)
Impairment		7		(66,610,544	)		-			(4,511,877	)
Depreciation				(18,460,117	)		(10,178,908	)		(6,834,742	)
General and administrative expenses		19		(11,636,713	)		(6,200,094	)		(416,908	)
Total operating expenses				(157,708,296	)		(37,637,324	)		(23,398,561	)
Operating (loss)/income				(75,598,605	)		1,160,589			4,220,480
Other (expense) and income, net
Financial expenses		20		(7,060,027	)		(3,230,895	)		(699,115	)
Realized (loss) on derivative financial instruments		12		-			(279,560	)		(808,085	)
Unrealized gain on derivative financial instruments		12		-			-			956,120
Financial income				51,008			36,534			4,929
Other expenses, net				(118,968	)		(508,766	)		(256,292	)
Total other expense, net				(7,127,987	)		(3,982,687	)		(802,443	)
Net (loss)/income			$	(82,726,592	)	$	(2,822,098	)	$	3,418,037
Attributable to:
Equity holders of the parent			$	(82,726,592	)	$	(2,822,098	)	$	3,418,037
Loss per share
Basic and diluted		22	$	(2.88	)	$	(0.18	)	$	0.61
Basic and diluted weighted average shares outstanding		22		28,704,876			15,600,813			5,589,147

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Scorpio Tankers Inc. and Subsidiaries

Consolidated statements of comprehensive loss or income

For the years ended December 31, 2011, 2010 and 2009

	For the year ended December 31,
	2011			2010			2009
Net (loss)/income	$	(82,726,592	)	$	(2,822,098	)	$	3,418,037
Other comprehensive loss:
Unrealized loss on derivative financial instruments		(700,574	)		-			-
Other comprehensive loss		(700,574	)		-			-
Total comprehensive (loss)/income	$	(83,427,166	)	$	(2,822,098	)	$	3,418,037

 The accompanying notes are an integral part of these consolidated financial statements.

F-5

Scorpio Tankers Inc. and Subsidiaries

Consolidated statements of changes in shareholders’ equity

For the years ended December 31, 2011, 2010 and 2009

	Number of shares outstanding			Share capital		Additional paid-in capital			Treasury shares			Merger reserve			Retained earnings/ (Accumulated deficit)			Hedging reserve			Total
Balance at January 1, 2009		5,589,147			55,891	$	-		$	-		$	20,243,275		$	-		$	-		$	20,299,166
Net income for the period		-			-		-			-			1,710,221			1,707,816			-			3,418,037
Capital contribution		-			-		46,272,339			-			-			-			-			46,272,339
Dividends paid ($1.55 per share)		-			-		-			-			(8,661,000	)		-			-			(8,661,000	)
Balance at December 31, 2009		5,589,147		$	55,891	$	46,272,339		$	-		$	13,292,496		$	1,707,816		$	-		$	61,328,542
Balance at January 1, 2010		5,589,147		$	55,891	$	46,272,339		$	-		$	13,292,496		$	1,707,816		$	-		$	61,328,542
Net loss for the period		-			-		-			-			-			(2,822,098	)		-			(2,822,098	)
Net proceeds from initial public offering		18,721,454			187,215		207,749,057			-			-			-			-			207,936,272
Issuance of restricted shares		568,458			5,685		(5,685	)		-			-			-			-			-
Amortization of restricted shares		-			-		988,273			-			-			-			-			988,273
Purchase of treasury shares		(244,146	)							(2,647,807	)		-			-			-			(2,647,807	)
Balance at December 31, 2010		24,634,913		$	248,791	$	255,003,984		$	(2,647,807	)	$	13,292,496		$	(1,114,282	)	$	-		$	264,783,182
Balance at January 1, 2011		24,634,913		$	248,791	$	255,003,984		$	(2,647,807	)	$	13,292,496		$	(1,114,282	)	$	-		$	264,783,182
Net loss for the period		-			-		-			-			-			(82,726,592	)		-			(82,726,592	)
Other comprehensive loss		-			-		-			-			-			-			(700,574	)		(700,574	)
Net proceeds from follow on offerings (Note 14)		13,900,000			139,000		104,846,554			-			-			-			-			104,985,554
Issuance of restricted shares		290,000			2,900		(2,900	)		-			-			-			-			-
Amortization of restricted shares		-			-		3,362,345			-			-			-			-			3,362,345
Purchase of treasury shares		(479,519	)		-		-			(2,850,688	)		-			-			-			(2,850,688	)
Transfer to/from reserves		-			-		-			-			(13,292,496	)		13,292,496			-			-
Balance at December 31, 2011		38,345,394		$	390,691	$	363,209,983		$	(5,498,495	)	$	-		$	(70,548,378	)	$	(700,574	)	$	286,853,227

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Scorpio Tankers Inc. and Subsidiaries

Consolidated statements of changes in shareholders’ equity

For the years ended December 31, 2011, 2010 and 2009

		For the year ended December 31,
		2011			2010			2009
	Notes
Operating activities
Net (loss)/income		$	(82,726,592	)	$	(2,822,098	)	$	3,418,037
Depreciation	6		18,460,117			10,178,908			6,834,742
Impairment	7		66,610,544			-			4,511,877
Amortization of restricted stock			3,362,345			988,273			-
Amortization of deferred financing fees			985,881			246,130			-
Amortization of acquired time charter contracts			-			2,344,495			-
Write off of vessel purchase options			126,337			-			-
Straight-line adjustment for charterhire expense			84,201			-			-
			6,902,833			10,935,708			14,764,656
Changes in assets and liabilities:
Drydock payments			(2,516,409	)		(974,430	)		(1,580,826	)
(Increase)/decrease in inventories			(1,409,789	)		(853,079	)		69,086
(Increase)/decrease in accounts receivable			(13,031,294	)		(5,915,254	)		2,262,984
(Increase)/decrease in prepaid expenses			(1,074,757	)		123,265			(4,345	)
(Decrease)/increase in accounts payable			(954,027	)		2,600,483			(279,628	)
Increase in accrued expenses			1,005,799			175,218			120,641
Decrease/(increase) in the value of derivative financial instruments			-			164,690			(956,120	)
Interest rate swap termination payment			-			(1,850,000	)		-
Decrease/(increase) in shareholder receivable			-			1,928,253			(1,928,253	)
Decrease in shareholder payable			-			-			(3,162,344	)
Increase in other assets			(1,373,519	)		(1,428,376	)		-
			(19,353,996	)		(6,029,230	)		(5,458,805	)
Net cash (outflow)/inflow from operating activities			(12,451,163	)		4,906,478			9,305,851
Investing activities
Acquisition of vessels			(71,478,937	)		(243,121,582	)		-
Vessels under construction			(51,094,500	)		-			-
Acquisition of time charter contracts			-			(2,344,495	)		-
Purchases of other assets			-			(128,732	)		-
Net cash outflow from investing activities			(122,573,437	)		(245,594,809	)		-
Financing Activities
Dividends paid			-			-			(8,661,000	)
Bank loan repayment			(109,637,551	)		(44,625,418	)		(3,600,000	)
Bank loan drawdown			115,307,500			150,000,000			-
Debt issuance costs			(4,134,028	)		(2,232,310	)		-
Net proceeds from issuance of common stock			104,985,555			207,936,272			(207,990	)
Purchase of Treasury shares			(2,850,688	)		(2,647,807	)		-
Net cash inflow/(outflow) from financing activities			103,670,788			308,430,737			(12,468,990	)
(Decrease)/increase in cash and cash equivalents			(31,353,812	)		67,742,406			(3,163,139	)
Cash and cash equivalents at January 1,			68,186,902			444,496			3,607,635
Cash and cash equivalents at December 31,		$	36,833,090		$	68,186,902		$	444,496
Supplemental information:
Interest paid		$	5,348,573		$	2,276,694		$	760,974

During 2009 there were two significant non-cash transactions requiring disclosure (i) the legal formation of the Scorpio Tankers Inc. and its subsidiaries (see Note 1) and (ii) the conversion of the related party payable of $27.4 million and shareholder payable of $18.9 million to equity. There were no non-cash transactions during 2010 requiring disclosure. During 2011, we accrued $9.4 million for an installment payment on our newbuilding vessels (see note 6) which represents a significant non-cash transaction. This payment was made in January 2012.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

1.    General information and significant accounting policies

Company

Scorpio Tankers Inc. and its subsidiaries (together “we”, “our” or the “Company”) are engaged in seaborne transportation of crude oil and refined petroleum products in the international shipping markets. Scorpio Tankers Inc. was incorporated in the Republic of the Marshall Islands on July 1, 2009.

On October 1, 2009, Simon Financial Limited (“Simon”) transferred to Scorpio Tankers Inc. three operating subsidiary companies, as described further below. Simon is owned by the Lolli-Ghetti family of which, Emanuele Lauro, our founder, Chairman and Chief Executive Officer is a member.

On April 6, 2010, we closed on the initial public offering of 12,500,000 shares of common stock at $13.00 per share. The stock trades on the New York Stock Exchange under the symbol STNG. Further details of the initial public offering and certain follow-on offerings are provided in Note 14.

Prior to the initial public offering, a subsidiary of Simon owned 100% of our shares (or 5,589,147 shares). As of December 31, 2011 and after completion of both the initial public offering and subsequent follow-on offerings, the Lolli-Ghetti family no longer maintains a controlling interest in the Company.

Business

Our owned fleet at December 31, 2011 consisted of one LR2 product tanker, four LR1 product tankers, two MR product tankers, four Handymax tankers and one post-Panamax tanker engaged in seaborne transportation of crude oil and refined petroleum products in the international shipping markets. We had one LR2 and six Handymax product tankers time chartered-in as of December 31, 2011. Additionally, we had contracted for six newbuilding MR tankers under construction at Hyundai Mipo Dockyard Co. Ltd. of South Korea (“Hyundai”) as of December 31, 2011.

Our vessels are commercially managed by Scorpio Commercial Management S.A.M. (“SCM”), which is currently owned by the Lolli-Ghetti family. SCM’s services include securing employment, in pools, in the spot market and on time charters.

Our vessels are technically managed by Scorpio Ship Management S.A.M. (“SSM”), which is also owned by the Lolli-Ghetti family. SSM facilitates vessel support such as crew, provisions, deck and engine stores, insurance, maintenance and repairs, and other services as necessary to operate the vessels such as drydocks and vetting/inspection under a technical management agreement.

During 2011, we had an administrative services agreement with Liberty Holding Company (“Liberty”), which is a subsidiary of Simon. On March 13, 2012, the agreement was assigned to Scorpio Services Holding Ltd or SSH. The administrative services provided under the agreement primarily include accounting, legal compliance, financial, information technology services, and the provision of administrative staff and office space. Liberty has contracted these services to SCM. We pay our managers fees for these services and reimburse them for direct or indirect expenses that they incur in providing these services.

Basis of accounting

The consolidated financial statements have been presented in United States dollars (USD or $), which is the functional currency of Scorpio Tankers Inc. and all its subsidiaries. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board and on a historical cost basis, except for the revaluation of certain financial instruments.

Simon transferred three subsidiaries to the Company (see below) on October 1, 2009 for a nominal consideration. For accounting purposes, this transfer represented a combination of entities under common control, with Simon being the ultimate parent company of all entities in the Company prior to our initial public offering. As such, this business combination was outside the scope of IFRS 3 (2004), "Business Combinations", and for the year ended December 31, 2009 the results have therefore been prepared using the principles of merger accounting. Under this method:

l the carrying values of the assets and liabilities of the parties to the combination are recorded at the historical carrying amount of those assets and liabilities and are not adjusted to fair value on combination;

l the results and cash flows of all the combining entities are brought into the consolidated financial statements of the combined entity from the beginning of the financial year in which the combination occurred. Prior year comparatives are also presented on the basis that the combination was in place throughout the prior year; and

l the difference between the historical carrying amounts of net assets transferred and the consideration provided on transfer has been recognized in equity through share capital and the merger reserve. In June 2011, our board of directors authorized the reclassification of the merger reserve of $13.3 million within shareholders’ equity to retained earnings.

F-8

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Any profits recognized after the October 1, 2009 reorganization have been recognized in equity within retained earnings.

Subsidiaries transferred to Scorpio Tankers Inc. on October 1, 2009 were:

Company	Vessel	Percent owned	Incorporated in
·Noemi Shipping Company Limited	Noemi	100%	The Republic of the Marshall Islands
·Senatore Shipping Company Limited	Senatore	100%	The Republic of the Marshall Islands
·Venice Shipping Company Limited	Venice	100%	The Republic of the Marshall Islands

All inter-company transactions, balances, income and expenses were eliminated on consolidation. There have been no cost allocations from Simon, as all costs of doing business have been included in the operations of the subsidiaries.

Going concern

The financial statements have been prepared in accordance with the going concern basis of accounting for the reasons outlined in the "Liquidity Risk" section of Note 23.

Significant Accounting Policies

Common control transactions

The assets and liabilities transferred from entities under common control were recorded at the transferor's carrying values. Any difference between the carrying value of the net assets acquired, and the consideration paid by us was accounted for as an adjustment to shareholder's equity. The net assets transferred and their results were recognized from the date on which control was obtained by the ultimate controlling party.

Revenue recognition

Vessel revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, and other sales-related or value added taxes.

Vessel revenue is comprised of time charter revenue, voyage revenue and pool revenue.

(1)Time charter revenue is recognized as services are performed based on the daily rates specified in the time charter contract.

(2)Voyage charter agreements are charter hires, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate. Revenue from voyage charter agreements is recognized as voyage revenue on a pro-rata basis over the duration of the voyage on a discharge to discharge basis.

(3)Pool revenue for each vessel is determined in accordance with the profit sharing terms specified within each pool agreement. In particular, the pool manager aggregates the revenues and expenses of all of the pool participants and distributes the net earnings to participants based on:

·the pool points (vessel attributes such as cargo carrying capacity, fuel consumption, and construction characteristics are taken into consideration); and

·the number of days the vessel participated in the pool in the period.

We recognize pool revenue on a monthly basis, when the vessel has participated in a pool during the period and the amount of pool revenue for the month can be estimated reliably. We receive estimated vessel earnings based on the known number of days the vessel has participated in the pool, the contract terms, and the estimated monthly pool revenue. On a quarterly basis, we receive a report from the pool which identifies the number of days the vessel participated in the pool, the total pool points for the period, the total pool revenue for the period, and the calculated share of pool revenue for the vessel. We review the quarterly report for consistency with each vessel's pool agreement and vessel management records. The estimated pool revenue is reconciled quarterly, coinciding with our external reporting periods, to the actual pool revenue earned, per the pool report. Consequently, in our financial statements, reported revenues represent actual pooled revenues. While differences do arise in the performance of these quarterly reconciliations, such differences are not material to total reported revenues.

F-9

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Interest receivable is accrued on a time basis and includes interest earned on cash deposits.

Acquired time charter contracts

Acquired time charter contracts arise from the purchase of time charter contracts from third parties and are stated at cost at the date of acquisition, less accumulated amortization. Where the time charter contract is acquired along with a vessel, the cost of the acquisition is determined based on the relative fair values of each element acquired. Amortization expense is recognized on a straight line basis over the useful life of the asset, which has been determined to be the remaining contract life at the date of acquisition. The useful life and amortization method are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense related to the assets is recognized as an offset to revenue.

Voyage expenses

Voyage expenses, which primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters are expensed ratably over the estimated length of each voyage, which can be allocated between reporting periods based on the timing of the voyage.  Consistent with our revenue recognition for voyage charters, voyage expenses are calculated on a discharge-to-discharge basis. 

Vessel operating costs

Vessel operating costs, which include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses, and technical management fees, are expensed as incurred.

(Loss)/earnings per share

Basic earnings per share is calculated by dividing the net income attributable to equity holders of the common shares by the weighted average number of common shares outstanding assuming that the reorganization described under "Basis of Accounting" was effective during all periods shown. Diluted earnings per share are calculated by adjusting the net income attributable to equity holders of the parent and the weighted average number of common shares used for calculating basic earnings per share for the effects of all potentially dilutive shares. Such potentially dilutive common shares are excluded when the effect would be to increase earnings per share or reduce a loss per share. For the year ended December 31, 2009, we had no potentially dilutive common shares. In the years ended December 31, 2011 and 2010, there were potentially dilutive items as a result of our restricted stock plan (see note 14). However, we were in a loss making position for those years, and therefore there was no impact of these potentially dilutive items on earnings per share.

Charterhire expense

Charterhire expense is the amount we pay the owner for time chartered-in vessels.  The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, profit sharing, or current market rates.  The vessel’s owner is responsible for crewing and other vessel operating costs.  Charterhire expense is recognized ratably over the charterhire period.

Operating leases

Costs in respect of operating leases are charged to the consolidated statement of profit or loss on a straight line basis over the lease term.

Foreign currencies

The individual financial statements of Scorpio Tankers Inc. and each of its subsidiaries are presented in the currency of the primary economic environment in which we operate (its functional currency), which in all cases is US dollars. For the purpose of the consolidated financial statements, our results and financial position are also expressed in US dollars.

In preparing the financial statements of Scorpio Tankers Inc. and each of its subsidiaries, transactions in currencies other than the US dollar are recorded at the rate of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in other currencies are retranslated into the functional currency at rates ruling at that date. All resultant exchange differences have been recognized in the consolidated profit or loss statement. The amount charged to the consolidated profit or loss statement during 2011 was a gain of $22,802 and in 2010 and 2009 were losses of $506 and $36,626, respectively.

F-10

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Segment reporting

For the year ended December 31, 2009 we reported one business segment and one geographical segment since (i) all of the vessels during those periods were Panamax vessels that transport oil and refined petroleum products and (ii) all of the vessels can trade in the international shipping market and are not limited to specific parts of the world. During that year, the chief operating decision makers of Simon did not evaluate our operating results on a discrete basis including on an individual subsidiary or individual vessel basis nor by distinct geographical locations. Rather, our operating results were assessed on an aggregated owned vessel basis. We have therefore not presented separate tables for the results of operations in this period as all relevant information can be obtained directly from the consolidated statement of profit or loss.

During the years ended 2010 and 2011, we owned or chartered-in vessels spanning four different classes, Handymax, MR, Panamax/LR1, and Aframax/LR2, all of which earn revenues in the seaborne transportation of crude oil and refined petroleum products in the international shipping markets. Each vessel within its respective class qualifies as an operating segment under IFRS. However, each vessel also exhibits similar long-term financial performance and similar economic characteristics to the other vessels within the respective vessel class, thereby meeting the aggregation criteria in IFRS. We have therefore chosen to present our segment information by vessel class using the aggregated information from the individual vessels.

Segment results are evaluated based on reported profit or loss from each segment. The accounting policies applied to the reportable segments are the same as those used in the preparation of our consolidated financial statements.

It is not practical to report revenue or non-current assets on a geographical basis due to the international nature of the shipping market.

Vessels and drydock

Our fleet is measured at cost, which includes directly attributable financing costs and the cost of work undertaken to enhance the capabilities of the vessels, less accumulated depreciation and impairment losses.

Depreciation is calculated on a straight-line basis to the estimated residual value over the anticipated useful life of the vessel from date of delivery. Vessels under construction are not depreciated until such time as they are ready for use. The residual value is estimated as the lightweight tonnage of each vessel multiplied by scrap value per ton. The scrap value per ton is estimated taking into consideration the historical four year scrap market rates at the balance sheet date with changes accounted for in the period of change and in future periods.

The vessels are required to undergo planned drydocks for replacement of certain components, major repairs and maintenance of other components, which cannot be carried out while the vessels are operating, approximately every 30 months or 60 months depending on the nature of work and external requirements. These drydock costs are capitalized and depreciated on a straight-line basis over the estimated period until the next drydock. We only include in deferred drydocking costs those direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred.

For an acquired or newly built vessel, a notional drydock is allocated from the vessel’s cost. The notional drydock cost is estimated by us, based on the expected costs related to the next drydock, which is based on experience and past history of similar vessels, and carried separately from the cost of the vessel. Subsequent drydocks are recorded at actual cost incurred. The drydock asset is amortized on a straight-line basis to the next estimated drydock. The estimated amortization period for a drydock is based on the estimated period between drydocks. We estimate the period between drydocks to be 30 months to 60 months. When the drydock expenditure is incurred prior to the expiry of the period, the remaining balance is expensed.

Impairment of vessels and drydock

At each balance sheet date, we review the carrying amount of our vessels and drydock to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the vessels and drydock is estimated in order to determine the extent of the impairment loss (if any). We treat each vessel and the related drydock as a cash generating unit.

F-11

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Recoverable amount is the higher of the fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of the cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in the prior years. A reversal of impairment is recognized as income immediately.

Inventories

Inventories consist of lubricating oils and other items including stock provisions, and are stated at the lower of cost and net realisable value. Cost is determined using the first in first out method. Stores and spares are charged to vessel operating costs when purchased.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the effective portion of the derivative is recognised in other comprehensive income and released to profit or loss when the qualifying asset impacts profit or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk, the capitalised borrowing costs reflect the hedged interest rate.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the consolidated profit or loss in the period in which they are incurred.

 Financial instruments

Financial assets and financial liabilities are recognized in our balance sheet when we become a party to the contractual provisions of the instrument.

Financial assets

All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is held for trading.

A financial asset is classified as held for trading if:

l it has been acquired principally for the purpose of selling in the near future; or

l it is a part of an identified portfolio of financial instruments that we manage together and has a recent actual pattern of short-term profit-taking; or

l it is a derivative that is not designated and effective as a hedging instrument.

F-12

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 23.

Loans and receivables

Amounts due from the pool and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as accounts receivable. Accounts receivable are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

Financial assets objective evidence of impairment could include:

l significant financial difficulty of the issuer or counterparty; or

l default or delinquency in interest or principal payments; or

l it becomes probable that the borrower will enter bankruptcy or financial re-organization. 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly-liquid investments with original maturities of three months or less, and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is held for trading, using the criteria set out above for financial assets.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note 23.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial asset and a financial liability. It allocates interest income and interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash flows (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) over the expected life of the financial asset and financial liability, or, where appropriate, a shorter period.

Derivative financial instruments

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship. We designate certain derivatives as hedges of highly probable forecast transactions (cash flow hedges) as described further below.

F-13

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months, and it is not expected to be realized or settled within 12 months.

Further details of derivative financial instruments are disclosed in Notes 12 and 23 to the consolidated financial statements.

Hedge accounting for cash flow hedges

The Company’s policy is to designate certain hedging instruments, which can include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

For the years ended December 31, 2011, 2010 and 2009, we were party to derivative financial instruments to manage our exposure to interest rate fluctuations. With a portion of the net proceeds from our initial public offering, on April 9, 2010, we settled the outstanding portion of an interest rate swap entered into in April 2005. In August 2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing interest rates on our 2011 Credit Facility and 2010 Revolving Credit Facility (see note 11). These swaps have been designated and accounted for as cash flow hedges. Derivative financial instruments are initially recognized in the balance sheet at fair value at the date the derivative contract is entered into and are subsequently measured at their fair value as other assets or other liabilities, respectively. Changes in fair value of derivative financial instruments, which are designated as cash flow hedges and deemed to be effective, are recognized directly in other comprehensive income and classified as ‘hedging reserves’. Changes in fair value of a portion of a hedge deemed to be ineffective are recognized in net profit or loss. Hedge effectiveness is measured quarterly.

Amounts previously recognized in other comprehensive income and accumulated in the hedging reserve are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, in the same line of the statement of profit or loss as the recognized hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability

Hedge accounting is discontinued when the Company revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income at that time is accumulated in the hedge reserve and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the hedge reserve is recognized immediately in profit or loss.

Equity instruments

An equity instrument is any contract that evidences a residual interest in our assets after deducting all of its liabilities. Equity instruments issued by us are recorded at the proceeds received, net of direct issue costs.

We have 38,345,394 registered shares authorized and issued with a par value of $0.01 per share at December 31, 2011. These shares provide the holders with rights to dividends and voting rights.

Provisions

Provisions are recognized when we have a present obligation as a result of a past event, and it is probable that we will be required to settle that obligation. Provisions are measured at our best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Dividends

A provision for dividends payable is recognized when the dividend has been declared in accordance with the terms of the shareholder agreement.

F-14

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Dividend per share presented in these consolidated financial statements is calculated by dividing the aggregate dividends declared by all of Scorpio Tankers Inc's subsidiaries by the number of Scorpio Tankers Inc. shares assuming these shares have been outstanding throughout the periods presented.

Restricted stock

The restricted stock awards granted to our employees and directors in June 2010 and January 2011 (Note 14) contain only service conditions and are classified as equity settled. Accordingly, the fair value of our restricted stock awards was calculated by multiplying the average of the high and low share price on the grant date and the number of restricted stock shares granted that are expected to vest.  We believe that the share price at the grant date serves as a proxy for the fair value of services to be provided by the employees and directors under the plan.

Compensation expense related to the awards is recognized ratably over the vesting period, based on our estimate of the number of awards that will eventually vest. The vesting period is the period during which an employee or director is required to provide service in exchange for an award and is updated at each balance sheet date to reflect any revisions in estimate of the number of awards expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimate, if any, is recognized in the profit or loss statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the accounting policies, we are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The significant judgements and estimates are as follows:

Revenue recognition

We currently generate all revenue from time charters, spot voyages, or pools. Revenue recognition for time charters and pools is generally not as complex or as subjective as voyage charters (spot voyages). Time charters are for a specific period of time at a specific rate per day. For long-term time charters, revenue is recognized on a straight-line basis over the term of the charter. Pool revenues are determined by the pool managers from the total revenues and expenses of the pool and allocated to pool participants using a mechanism set out in the pool agreement.

We generated revenue from spot voyages during the years ended December 31, 2011 and 2010. Within the shipping industry, there are two methods used to account for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition of voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues and the method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates voyage results than the load-to-load basis. Since, at the time of discharge, management generally knows the next load port and expected discharge port, the discharge-to-discharge calculation of spot voyage revenues can be estimated with a greater degree of accuracy.

Vessel impairment

We evaluate the carrying amounts of our vessels to determine whether there is any indication that those vessels have suffered an impairment loss. If any such indication exists, the recoverable amount of vessels is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows related to vessels is complex and requires us to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile. As part of our process of assessing the fair value less cost to sell of the vessel, we obtain vessel valuations from leading, independent and internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be impaired. If an indication of impairment is identified, the need for recognising an impairment loss is assessed by comparing the carrying amount of the vessels to the higher of the fair value less cost to sell and the value in use. Likewise, if there is an indication that an impairment loss recognized in prior periods no longer exists or may have decreased, the need for recognizing an impairment reversal is assessed by comparing the carrying amount of the vessels to the latest estimate of recoverable amount.

F-15

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

At December 31, 2011, the carrying amounts of all our vessels were greater than their fair values less costs to sell (determined taking into consideration three independent broker valuations) which served as indicators of impairment. In line with our policy, for each vessel we performed a value in use calculation where we estimated the vessel’s future cash flows based on a combination of the latest forecast time charter rates for the next three years (obtained from a third party service provider), a steady growth rate in freight rates in each period thereafter which is based on management’s long-term view of the market, and our best estimate of vessel operating expenses and drydock costs. These cash flows were then discounted to their present value, using a pre-tax discount rate based on our current borrowing rates adjusted for certain credit risks. The value in use calculations for all vessels were less than their fair value less costs to sell and accordingly the recoverable amount of all our vessels was determined to be its fair value less costs to sell. As a result, we recorded an impairment loss of $66.6 million as described further in note 7.

Vessel lives and residual value

The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation and impairment. We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives. Effective April 1, 2010, we revised the estimated useful life of our vessels from 20 years to 25 years from the date of initial delivery from the shipyard. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap value per ton is estimated taking into consideration the historical four year scrap market rate average at the balance sheet date.

An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or scrap value would have the effect of increasing the annual depreciation charge.

When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel's useful life is adjusted to end at the date such regulations become effective. The estimated salvage value of the vessels may not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.

Deferred drydock cost

We recognize drydock costs as a separate component of the each vessel’s carrying amount and amortize the drydock cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period between drydocks performed, which can result in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred at the drydock yard and parts and supplies used in making such repairs.

Standards and Interpretations in issue not yet adopted

 Standards and Interpretations adopted during the period

IAS 24 (amended)                                                            Related party disclosures

Improvements to IFRS (May 2010)

This standard did not have an impact on these consolidated financial statements.

Standards and Interpretations in issue not yet adopted

 At the date of authorization of these consolidated financial statements, the following Standards and Interpretations which have not been applied in these consolidated financial statements were in issue but not yet effective:

IFRS 9	Financial Instruments
IFRS 7	Financial Instruments: Disclosures
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments
IFRS 13	Fair Value Measurement
IFRS 12	Disclosure of Interests in Other Entities
IFRS 11	Joint Arrangements
IFRS 10	Consolidated Financial Statements
IAS 27 (revised May 2011)	Separate Financial Statements
IAS 32	Financial Instruments: Presentation
Amendments to IFRS 7 (Oct 2010)	Disclosures – Transfers of Financial Assets
Amendment to IAS 32 (Oct. 2009)	Classification of Rights Issues

F-16

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

We do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on our financial statements.

2.    Cash and cash equivalents

	At December 31,
	2011		2010
Cash at banks	$	26,678,503	$	18,050,278
Deposits (1)		10,000,000		50,000,000
Cash on vessels		154,587		136,624
	$	36,833,090	$	68,186,902

(1)Represents bank deposits with original maturities of three months or less

3.    Accounts receivable

	At December 31,
	2011		2010
Scorpio Panamax Tanker Pool Limited	$	6,405,190	$	3,277,808
Scorpio Handymax Tanker Pool Limited		6,062,395		1,347,509
Freight receivables		3,196,485		246,007
Scorpio Aframax Tanker Pool Limited		1,127,251		714,078
Scorpio LR2 Tanker Pool Limited		1,720,264		-
Insurance receivables		282,142		991,606
Other receivables		1,591,819		777,244
	$	20,385,546	$	7,354,252

 Scorpio Aframax Tanker Pool Limited, Scorpio LR2 Tanker Pool Limited, Scorpio Panamax Tanker Pool Limited, and Scorpio Handymax Tanker Pool Limited are related parties, as described in Note 15.

Freight receivables primarily represent amounts collectible from customers for our vessels operating in the spot market. The STI Coral and STI Diamond were delivered in May 2011 and were operating in the spot market as of December 31, 2011. There were no vessels operating in the spot market at December 31, 2010, though certain vessels did operate in the spot market briefly during the year.

Insurance receivables primarily represent the amounts collectible on our insurance policies in relation to vessel repairs.

We consider that the carrying amount of accounts receivable approximates their fair value due to the short maturity thereof. Accounts receivable are non-interest bearing. At December 31, 2011 and December 31, 2010, no material receivable balances were either past due or impaired.

4.    Prepaid expenses

	At December 31,
	2011		2010
Vessel related prepaid expenses		1,231,030		146,560
Prepaid insurance		304,407		314,120
	$	1,535,437	$	460,680

F-17

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

The increase in vessel related prepaid expenses relates to the different timing of an annual payment to one of our vendors in comparison to prior year.

5.    Inventories

	At December 31,
	2011		2010
Lubricating oils	$	1,629,053	$	1,267,144
Bunkers		1,028,225		-
Other		39,018		19,363
	$	2,696,296	$	1,286,507

The balance in bunkers as of December 31, 2011 relates to the STI Coral and STI Diamond which were operating in the spot market at year end. We did not have any vessels operating in the spot market on December 31, 2010.

During 2011 and 2010 we recorded $6.9 million and $2.4 million of expense related to the purchase of inventory items.

6.    Vessels

Operating vessels and drydock

	Vessels			Drydock			Total
Cost
As of January 1, 2011	$	379,723,400		$	4,589,021		$	384,312,421
Additions (3)		70,934,675			3,168,355			74,103,030
Write off (1)		-			(620,055	)		(620,055	)
As of December 31, 2011		450,658,075			7,137,321			457,795,396
Accumulated depreciation and impairment
As of January 1, 2011		(49,501,513	)		(1,385,522	)		(50,887,035	)
Charge for the period		(15,906,544	)		(2,291,978	)		(18,198,522	)
Impairment (2)		(66,610,544	)		-			(66,610,544	)
Write off (1)		-			358,460			358,460
As of December 31, 2011		(132,018,601	)		(3,319,040	)		(135,337,641	)
Net Book Value
As of December 31, 2011	$	318,639,474		$	3,818,281		$	322,457,755
Cost
As of January 1, 2010	$	138,713,588			1,680,784		$	140,394,372
Additions (3)		241,009,812			2,997,820			244,007,632
Write off (1)		-			(89,583	)		(89,583	)
As of December 31, 2010		379,723,400			4,589,021			384,312,421
Accumulated Depreciation
As of January 1, 2010		(40,499,502	)		(300,603	)		(40,800,105	)
Charge for the period		(9,002,011	)		(1,174,502	)		(10,176,513	)
Write off (1)		-			89,583			89,583
As of December 31, 2010		(49,501,513	)		(1,385,522	)		(50,887,035	)
Net Book Value
As of December 31, 2010		330,221,887			3,203,499			333,425,386

(1)Represents the write off of the net book value of drydock costs for the STI Harmony of $223,726, which was drydocked in August 2011 and STI Highlander of $37,869 which was drydocked in October 2011. STI Conqueror and STI Heritage were also drydocked in 2010 and the residual costs written off.

(2)See Note 7 for impairment discussion.

(3)Venice, STI Harmony and STI Highlander were drydocked during the year ended December 31, 2011 for a total cost of $2.6 million. The remaining additions to drydock of $0.5 million during the year ended December 31, 2011 resulted from the notional drydock calculated on our vessel purchases of STI Coral and STI Diamond in May 2011. The additions in 2010 relate to costs incurred of $0.9 million during the drydock of the STI Conqueror and STI Heritage as well as $2.0 million arising from vessel purchases.

F-18

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Delivery of STI Coral and STI Diamond

On May 10, 2011, we took delivery of two MR product tankers that we previously agreed to acquire for an aggregate purchase price of $70.0 million. The ships were built in 2008 at the STX shipyard in Korea and were charter free at delivery.

Vessels under construction

On June 6, 2011, we signed contracts with Hyundai Mipo Dockyard Co. Ltd. of South Korea to construct five MR product tankers for approximately $37.4 million each. The vessels are scheduled to be delivered to the Company July 2012 and September 2012.

On December 21, 2011, we signed another contract with Hyundai Mipo Dockyard Co. Ltd. of South Korea to construct an additional MR product tanker for approximately $36.4 million. This vessel is scheduled to be delivered to the Company in January 2013.

We have made payments of $50.5 million on all six newbuilding vessels as of December 31, 2011. Furthermore, on December 28, 2011 the keels were laid on the first five newbuilding vessels. We made a related progress payment of $9.4 million in January 2012 which was accrued at December 31, 2011. In accordance with IAS 23 “Borrowing Costs”, applicable interest costs are also capitalized during the period that vessels are under construction. As of December 31, 2011, we capitalized $0.6 million (2010: $0) of interest expense attributable to the aforementioned vessels under construction, bringing the total amount capitalized at December 31, 2011 to $60.3 million. The interest capitalized was calculated by applying a rate of 4.4% to expenditure on such assets.

The following table is a timeline of future expected payments and dates as of December 31, 2011*:

Q1 2012	$	18.7	million
Q2 2012		18.6	million
Q3 2012		110.2	million
Q4 2012		3.6	million
Q1 2013		21.8	million
	$	172.9	million

*These are estimates only and are subject to change as construction progresses. The Q1 2012 includes the $9.4 million accrued at December 31, 2011.

F-19

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Collateral agreements

Noemi, Senatore, Venice, STI Harmony, STI Heritage, STI Conqueror, STI Matador, STI Gladiator and STI Highlander, with an aggregated net book value of $228.2 million as of December 31, 2011 were provided as collateral under a loan agreement dated June 2, 2010 and amended on July 13, 2011 (the "2010 Revolving Credit Facility", See Note 11).

STI Spirit, with a net book value of $37.7 million as of December 31, 2011, was provided as collateral under a loan agreement dated March 9, 2011 (the “STI Spirit Credit Facility”, See Note 11).

STI Coral and STI Diamond, with a net book value of $56.5 million as of December 31, 2011, were provided as collateral under a loan agreement dated May 3, 2011 (the “2011 Credit Facility”, See Note 11).

The vessels which collateralize the 2011 Credit Facility and 2010 Revolving Credit Facility also serve as collateral for the designated interest rate swap agreements (as described in Note 12), subordinated to the outstanding borrowings under each credit facility.

7.     Impairment of vessels

At the end of each reporting period, we evaluate the carrying amounts of vessels and related drydock costs to determine if there is any indication that those vessels and related drydock costs have suffered an impairment loss. If such indication exists, the recoverable amount of the vessels and related drydock costs is estimated in order to determine the extent of the impairment loss (if any). As part of this evaluation, we consider certain indicators of potential impairment, such as market conditions including forecast time charter rates and values for second hand product tankers, discounted projected vessel operating cash flows and the Company’s overall business plans.

During 2011, primarily as a consequence of a significant deterioration in market conditions, indicators of potential impairment were identified which triggered the requirement to perform a full impairment review.

At December 31, 2011, we determined fair value less estimated costs to sell for our vessels, taking into consideration three independent broker valuations for each vessel and adjusting for estimated disposal costs. Our estimate of fair value less costs to sell was then compared to each vessel’s respective carrying amount. The fair value less estimated costs to sell were lower than the carrying amount for all vessels indicating that an impairment might exist. We then performed a value in use calculation where we estimated each vessel’s future cash flows based on a combination of the latest forecast time charter rates for the next three years, a steady growth in freight rates in each period thereafter which is based management’s long-term view of the market, and our best estimate of vessel operating expenses and drydock costs. These cash flows were then discounted to their present value, using a discount rate based on our current borrowing rates adjusted for certain credit risks.

The value in use calculations for all vessels were less than the fair value less estimated costs to sell and accordingly, the recoverable amount of all vessels was determined to be its fair value less costs to sell. As a result, we recorded an impairment loss of $66.6 million to adjust the carrying amounts of our vessels to their fair value less estimated selling costs.

At December 31, 2010, the carrying amounts of our vessels were greater than the independent broker valuations (after adjusting for estimated selling costs) for six of our ten owned vessels, which served as indicators of impairment. In line with our policy, for each of the aforementioned six vessels performed a value in use calculation using similar principles to those outlined above. The value in use calculations were greater than the carrying amounts of the vessels in all instances, which resulted in no impairment being recognized.

At September 30, 2009 the carrying amounts of our vessels were greater than the independent broker valuations (after adjusting for estimate selling costs) for two of our three owned vessels, being the Noemi and Senatore, which served as an indicator of impairment. After performing a value in use calculation it was determined that the recoverable amount for both these vessels was its fair value less costs to sell, the latter determined by taking into consideration the independent broker valuation. As a result, we recorded an impairment loss of $4.5 million to adjust the carrying amounts of our vessels to reflect its fair value less costs to sell. There were no indicators of additional impairment at December 31, 2009.

F-20

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

8.     Other assets

	At December 31,
	2011		2010
Scorpio Handymax Tanker Ltd. pool working capital receivables	$	2,801,894	$	1,428,376
Upfront loan fees (1)		1,186,883		-
Vessel purchase options		-		126,337
	$	3,988,778	$	1,554,713

(1)Primarily represents upfront arrangement fees for our Newbuilding Credit Facility at December 31, 2011. This facility was executed on December 21, 2011 and the fees are being amortized over the period of the facility.

Working capital contributions

Upon entrance into the Scorpio Handymax Tanker Pool (“SHTP”), all vessels are required to make working capital contributions of both cash and bunkers. The contribution amount is repaid, without interest, upon a vessel’s exit from the SHTP no later than six months after the exit date. Bunkers on board a vessel exiting the SHTP are credited against such repayment at the actual invoice price of the bunkers. At December 31, 2011 we intended to operate our vessels currently in the SHTP for at least a year and have therefore classified the receivables as non-current. Additionally, all amounts due for time chartered-in vessels whose agreements expire over a year from the balance sheet date have been classified as non-current.

Purchase options

The agreement to purchase the STI Spirit in 2010 also included two separate purchase options with the seller, each option granted us the right, but not the obligation, to purchase a 2008 built Panamax LR1 ice class-1A product tanker for a price of $45.0 million. The combined fair value of the two options was estimated at $126,337 as of December 31, 2010. These options expired unexercised in September 2011, and this amount was written off.

9.     Accounts payable

	At December 31,
	2011		2010
Progress payments due for vessels under construction	$	9,351,375	$	-
Suppliers		2,322,741		3,049,744
Scorpio Handymax Tanker Pool Limited		50,120		22,349
Scorpio Ship Management		8,191		101,412
	$	11,732,427	$	3,173,505

The progress payment of $9.4 million related to our first five newbuilding vessels and was made in January 2012.

The majority of accounts payable are settled with a cash payment within 90 days. No interest is charged on accounts payable. We consider that the carrying amount of accounts payable approximates fair value.

10.     Accrued expenses

	At December 31,
	2011		2010
Upfront fees due on loan facilities(1)	$	1,186,883	$	-
Other accruals		2,189,150		1,123,351
	$	3,376,033	$	1,123,351

(1)Primarily represents upfront fees due for our Newbuilding Credit Facility at December 31, 2011. This facility was executed on December 21, 2011 and these fees were paid in February 2012.

F-21

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

11.    Bank loans

The following is a breakdown of the current and non-current portion of our bank loans outstanding at December 31, 2011 and 2010:

	At December 31,
	2011		2010
Current portion (1)	$	2,888,723	$	15,826,314
Non-current portion (1)		142,678,788		127,362,088
	$	145,567,511	$	143,188,402

(1)The current portion and non-current portion at December 31, 2011 were net of unamortized deferred financing fees of $1,356,817 and $3,920,203, respectively. The current portion and non-current portion at December 31, 2010 were net of unamortized deferred financing fees of $444,706 and $1,541,474, respectively.

2010 Revolving Credit Facility

On June 2, 2010, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA, acting through its New York branch, and Fortis Bank Nederland, for a senior secured term loan facility of up to $150 million. On July 12, 2011, we amended and restated the credit facility to convert it from a term loan to a reducing revolving credit facility. This gave us the ability to pay down and re-borrow from the total available commitments under the loan.  The total available commitments reduce by $4.1 million each quarter, with a lump sum reduction of $76.0 million atthe maturity date of June 2, 2015.  Our subsidiaries that own vessels that are collateralized by this loan act as guarantors under the amended and restated credit facility.  All terms mentioned are defined in the agreement.

On September 22, 2011 we executed a letter agreement amending certain financial covenants in the credit facility. On December 22, 2011 we entered into a first amendatory agreement with the lenders pursuant to which we amended the interest rate margin and certain financial covenants.

Drawdowns under the credit facility bear interest as follows: (1) through December 29, 2011, at LIBOR plus an applicable margin of 3.00% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR plus an applicable margin of 3.50% per annum; and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an applicable margin of 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization ratio is greater than 50%. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on June 2, 2015 and can only be used to refinance amounts outstanding from the original loan agreement and for general corporate purposes.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approval on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants include:

·The ratio of debt to capitalization shall be no greater than 0.60 to 1.00.

·Consolidated tangible net worth (i.e. total shareholders’ equity) shall be no less than US$150,000,000 plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 1, 2010 going forward.

·The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it will increase to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013, 2.00 to 1.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

·Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

·The aggregate fair market value of the collateral vessels (see note 6) shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.

F-22

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

In August 2011, we reduced our outstanding balance under the credit facility by $65 million, in September 2011 we drew down $6 million and in December 2011, we reduced the outstanding balance by $34 million and drew down $47 million. The outstanding balance at December 31, 2011 and 2010 was $91.0 million and $145.2 million, respectively. There was $37.9 million available to draw at December 31, 2011 and we were in compliance with the financial covenants relating to this facility as described above.

STI Spirit Credit Facility

On March 9, 2011, we executed a credit facility with DVB Bank SE for a senior secured term loan facility of $27.3 million for STI Spirit, which was acquired on November 10, 2010. The credit facility was drawn down on March 17, 2011 and matures on March 17, 2018. On September 28, 2011 we executed a letter agreement and on December 30, 2011 we executed a first amendatory agreement with the lenders pursuant to which we amended certain financial covenants contained in the credit facility. The loan bears interest at LIBOR plus a margin of 2.75% per annum. The loan will be repaid over 28 equal quarterly installments and a lump sum payment at maturity. The quarterly installments commenced three months after the drawdown and were calculated using an 18 year amortization profile. Our subsidiary, STI Spirit Shipping Company Limited, which owns the vessel, is the borrower and Scorpio Tankers Inc. is the guarantor. The outstanding balance at December 31, 2011 was $26.2 million and $0 at December 31, 2010. The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the vessel; restrictions on consolidations, mergers or sales of assets; approval of changes in the Manager of our vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

All terms mentioned are defined in the agreement.

The financial covenants of the credit facility are described below. On September 28, 2011, we executed an amendment modifying the EBITDA to interest expense financial covenant. On December 30, 2011, we entered into a first amendatory agreement modifying certain financial covenants.

·The ratio of debt to capitalization shall be no greater than 0.60 to 1.00.

·Consolidated tangible net worth (i.e. shareholders equity) shall be no less than $ 150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter.

·The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 for the period commencing with the fourth quarter of 2011 through the fourth quarter of 2012, at which time it will increase to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

·Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

·The aggregate fair market value of the STI Spirit shall at all times be no less than (i) 140% of the then outstanding loan balance if the vessel is operating in a pool or in the spot market or (ii) 130% of the then outstanding loan if the vessel is on time charter with a duration of at least one year.

We were in compliance with the financial covenants relating to this facility as of December 31, 2011.

2011 Credit facility

On May 3, 2011, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA, acting through its New York branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150 million. On September 22, 2011 we executed a letter agreement amending certain financial covenants, and on December 22, 2011 we executed a second amendatory agreement with the lenders pursuant to which we extended the availability period and amended the interest rate margin and certain financial covenants.

F-23

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

All terms mentioned in this section are defined in the agreement.

Drawdowns under this credit facility are available until May 3, 2013 and bear interest as follows: (1) until December 29, 2011, at LIBOR plus an applicable margin of (i) 2.75% per annum when our debt to capitalization (total debt plus equity) ratio is less than 45%, (ii) 3.00% per annum when our debt to capitalization ratio is greater than or equal to 45% but less than or equal to 50% and (iii) 3.25% when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR plus an applicable margin of 3.50% per annum and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater than 50%.  A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on May 3, 2017 and can only be used to finance up to 50% of the cost of future vessel acquisitions, which vessels would be the collateral for the credit facility.

Borrowings for each vessel financed under this facility represent a separate tranche, with repayment terms dependent on the age of the vessel at acquisition. Each tranche under the new credit facility is repayable in equal quarterly installments, with a lump sum payment at maturity, based on a full repayment of such tranche when the vessel to which it relates is sixteen years of age. Our subsidiaries, which may at any time, own one or more of our vessels, will act as guarantors under the credit facility.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants include:

·The ratio of debt to capitalization shall be no greater than 0.60 to 1.00.

·Consolidated tangible net worth (i.e. shareholders’ equity) shall be no less than $150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 1, 2010 going forward.

·The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it will increase to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00 at all times thereafter.  Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

·Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

·The aggregate fair market value of the collateral vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.

We were in compliance with the financial covenants relating to this facility as of December 31, 2011.

As of December 31, 2011, $115 million was available to finance up to 50% of the cost of future vessel acquisitions, and the outstanding balance for this facility was $33.6 million.

Newbuilding financing

On December 21, 2011, we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB for a senior secured term loan facility of up to $92.0 million. The credit facility may be used only for the partial financing of the pre-delivery and delivery installments of four newbuilding 52,000 DWT MR product tankers that the Company contracted for in June 2011 with Hyundai Mipo Dockyard Co. Ltd. and which are scheduled for delivery between July and September 2012. The newbuilding vessels will be owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility and Scorpio Tankers Inc. is the guarantor. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin of 2.70% per annum.  A commitment fee equal to 1.10% per annum is payable on the unused daily portion of the credit facility. 

F-24

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

All terms mentioned in this section are defined in the agreement.

The facility will be made available in four tranches, one for each vessel, each in the amount of $23.0 million, which is approximately 61% of contracted price for each vessel.  Drawdowns under each tranche will be available after the first 39% of the contracted price for each vessel is paid by the Company and subject to certain other conditions precedent.  The four vessels will be collateral for the credit facility.  Repayment of the tranche relating to the respective vessel will commence after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years, and each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard.

The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

The financial covenants include:

·The ratio of debt to capitalization shall be no greater than 0.60 to 1.00.

·Consolidated tangible net worth (i.e. shareholders equity) shall be no less than US$ 150,000,000 plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 2, 2010 going forward.

·The ratio of EBITDA to interest expense shall be no less than 2.00 to 1.00 commencing with the third fiscal quarter of 2011 until the fourth quarter of 2012, and 2.50 to 1.00 for all times thereafter. Such ratio shall be calculated quarterly on a trailing four quarter basis. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.

·Unrestricted cash and cash equivalents shall at all times be no less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

·The aggregate fair market value of the collateral vessels shall at all times be no less than 140% (120% if the vessel is subject to acceptable long term employment) of the aggregate principal amount outstanding plus a pro rata amount of any allocable swap exposure for the credit facility.

There were no borrowings outstanding as of December 31, 2011 under this facility and we were in compliance with the financial covenants related to this facility.

12. Derivative financial instruments

Interest rate swaps

In August 2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing interest rates on our 2011 and 2010 Credit Facilities with three different banks. Pursuant to these interest rate swap contracts, we agreed to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable us to partially mitigate the risk of changing interest rates on the cash flow exposures on the issued variable rate debt held. We determined the estimated fair value of our derivatives by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract. The notional principal amounts of these swaps aggregate $75 million, the details of which are as follows:

Hedged item	Notional amount	Start date	Expiration date	Fixed interest rate	Floating interest rate
2010 Credit Facility	$51 million	July 2, 2012	June 2, 2015	1.27%	3 mo. LIBOR
2011 Credit Facility	$24 million	July 2, 2012	June 30, 2015	1.30%	3 mo. LIBOR

F-25

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

The vessels which collateralize the 2011 and 2010 Credit Facilities also serve as collateral for the designated interest rate swap agreements, subordinated to the outstanding borrowings under each credit facility.

The following table summarizes the fair value of our derivative financial instruments as of December 31, 2011, which are included in the consolidated Balance Sheet:

	December 31, 2011			December 31, 2010
Current portion	$	(236,987	)	$	-
Non-current portion		(463,587	)		-
	$	(700,574	)	$	-

The following has been recorded as realized and unrealized losses from changes in the fair value of our derivative financial instruments:

	Fair value adjustments
	Statement of profit or loss
		Realized (gain)/loss		Unrealized (gain)/loss			Recognized in equity
Interest rate swap	$	-	$	-		$	(700,574	)
Total year ended December 31, 2011		-		-			(700,574	)
Interest rate swap		279,560		-			-
Total year ended December 31, 2010	$	279,560	$	-		$	-
Interest rate swap		808,085		(956,120	)		-
Total year ended December 31, 2009	$	808,085	$	(956,120	)	$	-

The realized loss of $279,560 in the year ended December 31, 2010 relates to the loss recorded upon settlement of an interest rate swap in April 2010.

F-26

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

13. Segment reporting

Information about our reportable segments for the years ended December 31, 2011 and December 31, 2010 is as a follows (we did not report segment information for the year ended December 31, 2009 as there was only one reportable segment in this period):

For the year ended December 31, 2011
	Panamax/LR1			Handymax			Aframax/LR2			MR			Operating segments subtotal			Corporate and eliminations			Total
Vessel revenue	$	31,100,705		$	32,237,902		$	6,484,272		$	12,286,812		$	82,109,691		$	-		$	82,109,691
Vessel operating costs		(14,427,452	)		(11,216,406	)		(2,547,436	)		(3,178,352	)		(31,369,646	)		-			(31,369,646	)
Voyage expenses		(13,383	)		(25,760	)		-			(6,841,876	)		(6,881,019	)		-			(6,881,019	)
Charterhire		(4,553,829	)		(17,357,635	)		(838,793	)		-			(22,750,257	)		-			(22,750,257	)
Impairment		(28,616,341	)(1)		(12,962,303	)(2)		(12,458,512	)		(12,573,388	)(3)		(66,610,544	)		-			(66,610,544	)
Depreciation		(9,279,150	)		(5,068,401	)		(2,074,352	)		(2,038,214	)		(18,460,117	)		-			(18,460,117	)
General and administrative expenses		(691,943	)		(762,083	)		(135,589	)		(313,782	)		(1,903,397	)		(9,733,316	)		(11,636,713	)
Financial expenses, net		420			-			(841,066	)		-			(840,646	)		(6,168,373	)		(7,009,019	)
Other expense, net		22,802			-			(133,548	)		-			(110,746	)		(8,222	)		(118,968	)
Segment profit or loss	$	(26,458,171	)	$	(15,154,686	)	$	(12,545,024	)	$	(12,658,800	)	$	(66,816,681	)	$	(15,909,911	)	$	(82,726,592	)
For the year ended December 31, 2010
	Panamax/LR1			Handymax			Aframax/LR2			MR			Operating segments subtotal			Corporate and eliminations			Total
Vessel revenue	$	29,344,505		$	8,812,130		$	641,278		$	-		$	38,797,913		$	-		$	38,797,913
Vessel operating costs		(12,363,968	)		(5,649,736	)		(426,788	)					(18,440,492	)					(18,440,492	)
Voyage expenses		(253,106	)		(2,289,192	)		-			-			(2,542,298	)		-			(2,542,298	)
Charterhire		(275,532	)		-			-			-			(275,532	)		-			(275,532	)
Depreciation		(7,493,632	)		(2,389,669	)		(293,211	)		-			(10,176,512	)		(2,396	)		(10,178,908	)
General and administrative expenses		(600,476	)		(266,509	)		(14,747	)		-			(881,732	)		(5,318,362	)		(6,200,094	)
Financial expenses, net		(133,708	)		1,383			778			-			(131,547	)		(3,062,814	)		(3,194,361	)
Other expense, net		(4,420	)		-			-			-			(4,420	)		(504,346	)		(508,766	)
Realized and unrealized gain/(loss) on derivative financial instruments		(279,560	)		-			-			-			(279,560	)		-			(279,560	)
Segment profit or loss	$	7,940,103		$	(1,781,593	)	$	(92,690	)	$	-		$	6,065,820		$	(8,887,918	)	$	(2,822,098	)

(1)The impairment charge per vessel within the Panamax/LR1 segment was $6.9 million, $5.5 million, $2.1 million, $7.7 million and $6.4 million, respectively. .

(2)The impairment charge per vessel within the Handymax segment was $4.3 million, $3.1 million, $3.7 million, and $1.9 million, respectively.

(3)The impairment charge per vessel within the MR segment was $6.3 million and $6.3 million, respectively.

F-27

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

The Panamax/LR1 and Handymax segments each contained revenue from at least one major customer representing greater than 10% of total revenue. The revenue from those customers within their respective segments was:

Segment	Customer	2011	2010	2009
Panamax/LR1	Scorpio Panamax Tanker Pool Limited (1)	$  22,593,663	$           9,645,173	$   10,415,331
	King Dustin (1)	8,507,042	8,700,195	8,288,767
	Liberty (1)	-	4,779,605	-
	BP		5,937,328	8,914,941
Handymax	Scorpio Handymax Tanker Pool Limited (1)	32,237,901	5,177,805	-
		$  63,338,607	$         34,240,106	$   27,619,039

 (1)  These customers are related parties (see note 15)

F-28

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements 

14.    Common shares

At December 31, 2009, we had 1,500 registered shares authorized and issued with a par value of $1.00 per share. These shares provide the holders with rights to dividends and voting rights.

On March 17, 2010, the board of directors amended and restated the Articles of Incorporation to (i) authorize 275,000,000 registered shares of which 250,000,000 were designated as common shares with a par value of $0.01 and 25,000,000 were designated as preferred shares with a par value of $0.01, and (ii) authorize a stock split of 3,726.098 to 1 for the issued and outstanding common shares, which increased the number of shares from 1,500 common shares issued and outstanding to 5,589,147 common shares issued and outstanding. All common share amounts in the consolidated financial statements for 2009 and 2010 have been retroactively adjusted, including the share amounts used in the calculation of earnings per share, to give effect to the stock split.

On April 6, 2010, we completed an initial public offering of our common shares on the New York Stock Exchange. In connection with the offering, we issued and sold 12,500,000 additional common shares. In addition, we listed our existing shares. The costs related to the listing of our existing shares of $0.5 million in the year ended December 31, 2010 were expensed and included in Other expenses, net in the consolidated statement of profit or loss. On May 4, 2010, the underwriters of the initial public offering exercised their over-allotment option to purchase an additional 450,000 shares. Net proceeds from the issuance of the common shares of 12,950,000, which included the over-allotment, were $154.8 million Prior to the offering, the Lolli-Ghetti Family, of which Emanuele Lauro, our Chairman and Chief Executive Officer, is a member, owned 100% of our outstanding common shares and held a controlling interest in Scorpio Tankers Inc. Total fees and commissions relating to the initial public offering and exercise of the over-allotment option were $14.2 million, of which, $0.7 million were recognized as expense in the profit or loss statement ($0.2 million in 2009 and $0.5 million in 2010) as being related to the registration of existing shares and the remaining $13.5 million were recorded as a reduction to additional paid in capital.

 On November 22, 2010, we completed a follow on public offering of 4,575,000 shares of common stock at $9.80 per share. After deducting underwriters' discounts and paying offering expenses, the net proceeds were approximately $41.8 million. On December 2, 2010, we closed the issuance of 686,250 shares of common stock at $9.80 and received $6.4 million, after deducting underwriters' discounts, when the underwriters in our follow on public offering exercised their over-allotment option. In addition, 510,204 shares were issued at the follow on public offering price in a concurrent private placement to a member of the Lolli-Ghetti family for total proceeds of $5.0 million. Total fees and commissions relating to the follow-on offering and exercise of the over-allotment option were $3.4 million and were recorded as a reduction to additional paid in capital.

On May 18, 2011, we closed on a follow-on public offering of 6,000,000 shares of common stock at $10.50 per share. On the same day, the underwriters exercised their over-allotment option to purchase an additional 900,000 shares at $10.50 per share After deducting underwriters’ discounts and paying offering expenses, the net proceeds of the follow-on public offering and the over-allotment were approximately $68.5 million. Total fees and commissions relating to the follow-on offering and exercise of the over-allotment option were $4.0 million and were recorded as a reduction to additional paid-in capital.

On December 6, 2011, the Company closed on the sale 7,000,000 shares of its common stock in an underwritten public offering at the offering price of $5.50 per share. The Company received net proceeds of approximately $36.5 million, after deducting underwriters' discounts and offering expenses. Total fees and commissions relating to the follow-on offering and exercise of the over-allotment option were $2.0 million and were recorded as a reduction to additional paid-in capital.

Stock buyback plan

On July 9, 2010, the board of directors authorized a share buyback program of $20.0 million. We repurchase these shares in the open market at the time and prices that we consider to be appropriate. As of December 31, 2011 and December 31, 2010, 723,665 and 244,146 shares have been purchased under the plan at an average price of $7.5981 and $10.8452 per share, respectively including commissions. As of December 31, 2011, the remaining stock buyback authorization was $14.5 million.

Restricted stock issuance

On June 18, 2010, we issued 559,458 shares of restricted stock to our employees for no cash consideration. The share price at the date of issue was $10.99 per share. The vesting schedule of the restricted stock for the executive officers is (i) one-third of the shares vest on April 6, 2013, (ii) one-third of the shares vest on April 6, 2014, and (iii) one-third of the shares vest on April 6, 2015. Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line method.

F-29

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

On January 31, 2011, we issued 281,000 shares of restricted stock to the employees for no cash consideration. The share price at the date of issue was $9.83 per share. The vesting schedule of the restricted stock is (i) one-third of the shares vest on January 31, 2012, (ii) one-third of the shares vest on January 31, 2013, and (iii) one-third of the shares vest on January 31, 2014. Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line method.

On January 31, 2011, we issued 9,000 shares of restricted stock to our independent directors for no cash consideration. The share price at the date of issue was $9.83 per share. These shares vested on January 31, 2012.

On April 6, 2011, 9,000 shares of restricted stock vested at $10.475 per share.

Assuming that all the restricted stock will vest, the stock compensation expense in future periods, including that related to restricted stock issued in prior periods will be:

	Employees		Directors		Total
For the year ending December 31, 2012	$	2,546,398	$	7,373	$	2,553,770
For the year ending December 31, 2013		1,497,055		-		1,497,055
For the year ending December 31, 2014		588,424		-		588,424
For the year ending December 31, 2015		106,929		-		106,929
	$	4,738,806	$	7,373	$	4,746,178

Shelf registration statement

On May 4, 2011, we filed a Form F-3 with the Securities and Exchange Commission, which can be used to issue common shares, preferred shares, debt securities, which may be guaranteed by one or more of our subsidiaries, warrants, purchase contracts, and units for up to $500 million in aggregate. As of December 31, 2011 we had issued common shares worth $111.0 million from the May 11, 2011 shelf registration.

Merger reserve

In June 2011, our board of directors authorized the reclassification of the merger reserve of $13.3 million within shareholders’ equity to retained earnings/accumulated deficit. The merger reserve was initially set up to identify the retained earnings/accumulated deficit brought in with the three vessels transferred by Simon and has been reclassified as there are no requirements in the Marshall Islands to maintain a separate merger reserve or to separately identify the retained earnings/accumulated deficit created subsequent to the transfer.

Shares outstanding

As of December 31, 2011 we had 38,345,394 shares outstanding.

15.     Related party transactions

Transactions with subsidiaries of Simon (herein referred to as Simon subsidiaries) and transactions with entities outside of Simon but controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated profit or loss statement and balance sheet are as follows:

	For the year
	ended December 30,
	2011			2010			2009
Pool revenue(1)
Scorpio Panamax Tanker Pool Limited		22,593,663			9,645,173			10,415,332
Scorpio Handymax Tanker Pool Limited		32,237,901			5,177,805			-
Scorpio LR2 Pool Limited		5,194,689			-			-
Scorpio Aframax Tanker Pool Limited		170,224			641,278			-
Time charter revenue(2)
King Dustin		8,507,042			8,700,195			8,288,767
Liberty and subsidiaries		-			4,779,605			-
Vessel operating costs(3)		(2,202,870	)		(1,058,699	)		(600,000	)
Commissions(4)		(270,069	)		(233,546	)		-
General and administrative expenses(5)		(1,936,567	)		(932,460	)		(344,162	)
Other(6)		-			(130,602	)		-

F-30

 Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

⁽¹⁾ These transactions relate to revenue earned in the Scorpio Panamax, Scorpio LR2, Scorpio Aframax and Scorpio Handymax Tanker Pools (the Pools). The Pools are operated by Scorpio Panamax Tanker Pool Limited, Scorpio LR2 Tanker Pool Limited, Scorpio Aframax Pool Limited, and Scorpio Handymax Tanker Pool Limited, respectively which are Simon subsidiaries.

⁽²⁾ The revenue earned was for Noemi's time charter with King Dustin (which is 50% jointly controlled by a Simon subsidiary). In 2010, the STI Harmony and STI Heritage were on a time charter with Liberty, a Simon subsidiary. See Note 16 for the terms of this time charter.

⁽³⁾ These transactions represent technical management fees charged by SSM, a related party affiliate, and included in the vessel operating costs in the consolidated profit or loss statement. We believe our technical management fees for the years ended December 31, 2011, 2010 and 2009 were at market rates because they were the same rates charged to other vessels managed by SSM. Each vessel pays $548 per day for technical management, which is, as noted, consistent with that charged to third parties by SSM.

⁽⁴⁾ These transactions represent the expense due to SCM for commissions related to the commercial management services provided by SCM under the Commercial Management Agreement (see description below). Each of the vessels pays a commission of 1.25% of their revenue when not in the Pools.  When our vessels are in the Pools, SCM, the pool manager, charges all vessels in the Pools (including third party participants) a commission of 1.25% of their revenue and $250 per day for Panamax/LR1 and Aframax/LR2 vessels and $300 per day for Handymax vessels.  We believe that the commercial management agreement represents a market rate for such services.

There were no charges related to these services for the year ended December 31, 2009. We estimate that the commissions on its fees for years ended December 31, 2009 would have been $215,046 and would have decreased net income for the period by the same amount if we operated as an unaffiliated entity. Our estimate is based upon the rates charged by SCM to third party participants in the pools for 2009.

⁽⁵⁾ We pay our administrator a fixed monthly fee calculated at cost with no profit for providing us with administrative services, and reimburse it for the reasonable direct or indirect expenses it incurs in providing us with such services. SSM provided administrative services to us under this agreement until September 30, 2010. From October 1, 2010, SCM has provided us administrative services under this agreement. The administrative fee included services provided to us for accounting, administrative services, information technology and management.

Our Commercial Management Agreement with SCM includes a daily flat fee charged payable to SCM for the vessels that are not in one of the pools managed by SCM. The flat fee is $250 per day for Panamaxes/LR1 and Aframax/LR2 vessels and $300 per day for Handymax and MR vessels. The flat fee is the same rate charged by SCM for vessels in the pools managed by SCM.

·The expense for the year ended December 31, 2011 of $1,936,567 included the flat fee of $268,331 charged by SCM and administrative fees of $1,668,236 charged by Liberty and are both included in general and administrative expenses in the consolidated profit or loss statement.

·The expense for the year ended December 31, 2010 of $932,460 included the flat fee of $203,405 charged by SCM and administrative fees of $729,055 charged by Liberty and are both included in general and administrative expenses in the consolidated profit or loss statement.

·The expense for the year ended December 31, 2009 of $344,162 included fees of $70,418 charged by SCM and $273,744 charged by SSM for administrative services under the previous administrative agreement. The fees charged by SCM for the year ended December 31, 2009 were not at market rates. We estimate the fees charged by SCM for the year ended December 31, 2009 would have been $182,500 and would have decreased net income by $112,082 had they been incurred at estimated market rates.

⁽⁶⁾ In accordance with our Administrative Services Agreement with Liberty, we have to reimburse Liberty for any direct expenses. These transactions represent reimbursements of $130,602 to Liberty for the year ended December 31, 2010 for expenses related to the registration of the existing shares in the initial public offering which closed on April 6, 2010. In addition, $344,490 related to expenses for the registration of the shares in the initial public offering were recorded as an offset against the proceeds from the offering. The cash payment was made in 2010.

·Furthermore, the Administrative Services Agreement with Liberty includes a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. These fees are capitalized as part of the carrying value of the related vessel. In the year ended December 31, 2011, we paid Liberty an aggregate fee of $700,000 in May 2011 for the purchase of the STI Coral and STI Diamond. In the year ended December 31, 2010, we paid Liberty an aggregate fee of $2.4 million for the purchases of the STI Harmony, STI Heritage, STI Conqueror, STI Matador, STI Gladiator, STI Highlander and STI Spirit.

F-31

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

We had the following balances with related parties, which have been included in the consolidated balance sheets:

	As of December 31,
	2011		2010
Assets:
Accounts receivable (due from the Pools)	$	18,102,105	$	6,767,770
Accounts receivable (SSM)		-		117
Accounts receivable (SCM)		-		3,463
Liabilities:
Accounts payable (owed to the Pools)		50,120		22,349
Accounts payable (SSM)		8,191		101,412
Accounts payable (SCM)		51,994		-

In 2011, the Company also entered into an agreement to reimburse costs to SSM as part of its supervision agreement for newbuilding vessels. No amounts have been charged under this agreement as of December 31, 2011.

Key management remuneration

Prior to April 6, 2010, our executive management services were provided by a related party affiliate and included in the management fees described in (5) above. If we were not part of Simon, and had the same ownership structure and a contract for administrative services for the periods up to April 6, 2010, we estimate our executive management remuneration would have been comparable with the executive management remuneration presented within general and administrative expenses in subsequent periods. The table below therefore depicts key management remuneration for the periods April 6, 2010 through December 31, 2010 and the year ended December 31, 2011 as follows:

	As of December 31,
	2011		2010
Short-term employee benefits (salaries)	$	2,874,864	$	2,059,907
Share-based compensation		3,189,170		922,123
Total		6,064,034		2,982,030

(1)Represents the amortization of restricted stock issued under our equity incentive plans in June 2010 and January 2011. See note 14.

There are no post employment benefits.

F-32

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

16.    Vessel revenue

During the years ended December 31, 2011, 2010, and 2009 we had two, four, and two vessels respectively that earned revenue through time charter contracts. As of December 31, 2011, there were no vessels on time charter contracts. The remaining revenue was generated from vessels operating in pools or in the spot market.

Revenue Sources

`	For the year
	Ended December 31,
	2011	2010	2009
Time charter revenue	9,626,401	19,417,128	$           17,203,709
Pool revenue	60,196,478	15,464,256	$           10,415,332
Voyage revenue	12,286,812	3,916,529	$                          -
	82,109,691	38,797,913	$           27,619,041

Time charter out contracts:

	Time Charter Out
Vessel	From	To	Daily rate
Noemi (1)	Jan 2007	Dec 2011	$    24,500
Senatore (2)	Sep 2007	Aug 2010	$    26,000
STI Spirit (3)	Jan 2011	Mar 2011	$    15,000
STI Harmony (4)	Jun 2010	Sep 2010	$    25,500
STI Heritage (4)	Jun 2010	Nov 2010	$    25,500

(1)The time charter contract with the Noemi was terminated on December 22, 2011.

(2)The time charter contract with the Senatore was terminated on August 26, 2010.

(3)The STI Spirit was on a short term time charter from January 11, 2011 through March 3, 2011 at a charterhire rate of $15,000 per day. From March 4, 2011 through March 26, 2011, the date the vessel entered the Scorpio LR2 Pool, the charterhire rate increased to $17,000 per day.

(4)STI Harmony and STI Heritage were acquired in June 2010 with existing time charter contracts that commenced in October 2007 and January 2008, respectively. The vessels were chartered to subsidiaries of Liberty, which are related parties. `

F-33

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

17. Charterhire

On December 12, 2010 we took delivery of the BW Zambesi, a 2010 built LR1 product tanker, on a time charter-in agreement for one year at a rate of $13,850 per day with an option to extend for an additional year at a rate of $14,850 per day. This vessel was redelivered to its owners on November 30, 2011.

On January 26, 2011, we took delivery of the Kraslava, a 2007 built Handymax ice-class 1B product tanker on a time charter-in arrangement for one year at a rate of $12,070 per day. In December 2011, this agreement was extended one month to February 26, 2012 and additional option periods were negotiated. The first option period on this vessel was exercised, extending the expiry date five months from February 26, 2012 to July 26, 2012. Subsequent to that, the Company has two consecutive optional periods of three and three months, respectively, at the current base rate of $12,070 per day. This vessel is currently operating in the Scorpio Handymax Tanker Pool.

On February 6, 2011 we took delivery of the Histria Azure, a 2007 built Handymax product tanker, on a time charter-in arrangement for one year at a rate of $12,250 per day. As of December 31, 2011, this vessel was off-hire and is expected to be re-delivered to the Company in April 2012. During 2011, this vessel operated in the Scorpio Handymax Tanker Pool from delivery through September 13, 2012 was off-hire for the remainder year. We have extended the term of the charter for this vessel for one year after the vessel is re-delivered to us at $12,000 per day. Pursuant to this charter agreement, we have an option to extend the term of the charter for four additional months at $12,250 per day and a second option to further extend the term of the charter agreement for an additional year at $13,650 per day.

On March 1, 2011, we took delivery of the Krisjanis Valdemars, a 2007 built Handymax ice-class 1B product tanker on a time charter-in arrangement for 10 months at a rate of $12,000 per day. The agreement also includes a profit and loss sharing provision whereby 50% of all profits and losses (the difference between the vessel's pool earnings and the charter hire expense) will be shared with the owner of the vessel. In December 2011 we negotiated an extension and several option periods to this agreement. The extension was a two month extension expiring on February 14, 2012. The first option period on this vessel was exercised, extending the expiry date four months from February 14, 2012 to June 14, 2012. Subsequent to that, the Company has two consecutive optional periods of three and three months, respectively, at the base rate of $12,000 per day. During the year ended December 31, 2011, $9,302 was due to us under this profit and loss sharing agreement. This vessel is currently operating in the Scorpio Handymax Tanker Pool.

On May 27, 2011, we took delivery of the Kazdanga, a 2007 built Handymax ice class 1B product tanker for one year at a rate of $12,345 per day with an option to extend the charter for an additional year at a rate of $13,335 per day. This vessel is currently operating in the Scorpio Handymax Tanker Pool.

We took delivery of two time chartered-in vessels in July 2011. The Histria Perla, a 2005 built Handymax product tanker and was delivered on July 15, 2011 and the Histria Coral, a 2006 built Handymax product tanker was delivered on July 17, 2011. Each vessel has been chartered-in for two years at a rate of $12,750 and $13,250 per day for the first and second years, respectively. Each charter agreement includes an option for the Company to extend the charter for an additional year at a rate of $14,500 per day.

On October 24, 2011, we took delivery of a 2006 built LR2 product tanker , the Khawr Aladid. The vessel was chartered-in for six months at $12,000 per day, and we currently have an option to extend the charter for a period of six months from delivery at $13,000 per day.

The undiscounted remaining future minimum lease payments under these arrangements as of December 31, 2011 are $26.9 million. The obligations under these agreements will be repaid as follows:

	As of December 31
	2011		2010
Less than 1 year	$	21,003,620	$	16,537,830
1-5 years		5,943,250		767,070
5+ years		-		-
	$	26,946,870	$	17,304,900

The total expense recognized under charter hire agreements during the year ended December 31, 2011 was $22.8 million $0.3 million during the year ended December 31, 2010 and $3.1 million during the year ended December 31, 2009.

F-34

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

18. Vessel operating costs

Vessel operating costs primarily represent crew related costs, stores, routine maintenance and repairs, insurance, technical management fees, and other related costs. The procurement of these services is managed on our behalf by our technical manager, SSM (see Note 15).

19. General and administrative expenses

General and administrative expenses primarily represent employee benefit expenses, professional fees and administration/commercial management fees (see note 15). Employee benefit expenses consist of:

	For the year ended December 31,
	2011		2010		2009
Short term employee benefits	$	3,796,051	$	2,389,952	$	-
Share based compensation (see note 14)		3,362,345		988,273		-
	$	7,158,396	$	3,378,225	$	-

20. Financial expenses

Financial expenses comprise:

	For the year ended December 31,
	2011		2010		2009
Interest payable on bank loans	$	4,950,587	$	2,984,765	$	699,115
Commitment fees on undrawn portions of bank loans		1,123,559		-		-
Amortization of deferred financing fees		985,881		246,130		-
Total Financial Expenses	$	7,060,027	$	3,230,895	$	699,115

21. Tax

Scorpio Tankers Inc. and its subsidiaries are incorporated in the Republic of the Marshall Islands, and in accordance with the income tax laws of the Marshall Islands, are not subject to Marshall Islands' income tax. We are also exempt from income tax in other jurisdictions including the United States of America due to tax treaties; therefore, we did not have any tax charges, benefits, or balances as of or for the periods ended December 31, 2011, 2010 and 2009.

22.    (Loss)/Earnings per share

The calculation of both basic and diluted loss/earnings per share is based on net loss/income attributable to equity holders of the parent and weighted average outstanding shares of:

	For the year ended December 31,
	2011			2010			2009
Net (loss)/income attributable to equity holders of the parent	$	(82,726,593	)	$	(2,822,098	)	$	3,418,037
Basic and diluted weighted average number of shares		28,704,876			15,600,813			5,589,147

The weighted average number of shares assumes the retroactive adjustment resulting from our stock split which occurred on March 17, 2010 and was effective during the year ending December 31, 2010.

The Company incurred a loss in the years ended December 31, 2011 and 2010. As a result, the inclusion of potentially restricted shares in the diluted loss per share calculation would have an antidilutive effect on the loss per share for the period. Therefore, all potentially dilutive items have been excluded from the diluted loss per share calculation for these periods. There were no potentially dilutive shares outstanding for the year ended December 31, 2009 nor were there any antidilutive instruments excluded from the calculation in that year.

F-35

23. Financial instruments

Funding and capital risk management

We manage our funding and capital resources to ensure our ability to continue as a going concern while maximizing the return to the shareholder through optimization of the debt and equity balance.

Categories of financial instruments

	Carrying value
	As of December 31
	2011		2010
Financial assets
Cash and cash equivalents	$	36,833,090	$	68,186,902
Loans and receivables		23,187,440		8,782,628
Financial liabilities
Derivatives designated in a cash flow hedge		700,574		-
Other liabilities (at amortized cost)		160,675,971		147,485,258

Derivative financial instruments in 2011, 2010 and 2009, solely comprised of interest rate swaps, where at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates to determine the fair value.

IFRS 7 requires classification of fair value measures into Levels 1, 2 and 3. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). In accordance with IFRS 7, the fair value measurement for the interest rate swaps in 2011, 2010 and 2009 were classified as Level 2.

The fair value of other financial assets and liabilities are approximately equal to their carrying values.

Financial risk management objectives

We identify and evaluate significant risks on an ongoing basis with the objective of managing the sensitivity of our results and financial position to those risks. These risks include market risk, credit risk and liquidity risk.

The use of financial derivatives is governed by our policies as approved by the board of directors.

Market risk

Our activities expose us to the financial risks of changes in interest rates. See Note 11 for a description of the interest rate risk.

In the years ended December 31, 2011, 2010 and 2009, we were party to interest rate swaps to mitigate the risk of rising interest rates. In August 2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing interest rates on our 2011 and 2010 Credit Facilities with three different banks. Additionally, in April 2010, we paid $1.9 million to settle an interest rate swap that was entered into in April 2005.

Details of the amounts recorded in the consolidated statement of profit or loss and statement of other comprehensive income in respect of such instruments are provided in note 12.

F-36

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

Sensitivity analysis – Interest rate risk

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at balance sheet date was outstanding for the whole year.

If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2011 would have decreased/increased by $1.6 million. This is mainly attributable to our exposure to interest rate movements on our 2010 Revolving Credit Facility, 2011 Credit Facility and STI Spirit Credit Facility.

If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the years ended December 31, 2010 and 2009 would have decreased/increased by $0.7 million and $1.0 million. This is mainly attributable to our exposure to interest rate movements in our 2010 Revolving Credit Facility (2010) and for the portion of the 2005 Credit Facility that was not hedged by the interest rate swap in place at the time (2009).

Credit risk

Credit risk is the potential exposure of loss in the event of non-performance by customers and derivative instrument counterparties.

We only place cash deposits with major banks covered with strong and acceptable credit ratings.

Accounts receivable are generally not collateralized; however, we believe that the credit risk is partially offset by the creditworthiness of our counterparties including the commercial and technical managers. We did not experience material credit losses on our accounts receivables portfolio in the years ended December 31, 2011, 2010 and 2009.

The carrying amount of financial assets recognized in the consolidated financial statements represents the maximum exposure to credit risk without taking account of the value of any collateral obtained. We did not experience any impairment losses on financial assets in the years ended December 31, 2011, 2010 and 2009.

We monitor exposure to credit risk, and believe that there is no substantial credit risk arising from counterparties.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments.

We manage liquidity risk by maintaining adequate reserves and borrowing facilities and by continuously monitoring forecast and actual cash flows.

Current economic conditions make forecasting difficult, and there is the possibility that our actual trading performance during the coming year may be materially different from expectations. We are sensitive to future freight rates and the proceeds from the sale of the two vessels, (see Note 24), which we believe will close as scheduled. We believe we will have sufficient cash balances to meet our commitments (including but not limited to newbuilding instalments, debt service obligations and charterhire commitments) for the next 12 months while complying with all the terms of our loan facilities. In reaching this conclusion we have assumed that the vessel sales described in note 24 proceed to completion. In the unlikely event that these transactions do not complete, we have alternatives such as selling the vessels to other parties.

Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, we believe that we have adequate financial resources to continue in operation for a period of at least twelve months from the date of approval of these consolidated financial statements. Accordingly, we continue to adopt the going concern basis in preparing our financial statements.

Remaining contractual maturity on secured bank loan (Note 11)

The following table details our remaining contractual maturity for our secured bank loan. The amounts represent the future undiscounted cash flows of the financial liability based on the earliest date on which we can be required to pay. The table includes both interest and principal cash flows and takes into consideration the amount fixed via the interest rate swap discussed above.

.

As the interest cash flows are not fixed, the interest amount included has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date.

F-37

Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

To be repaid as follows:

	As of December 31
	2011		2010
Less than 1 month	$	-	$	-
1-3 months		2,768,324		6,101,892
3 months to 1 year		8,376,320		17,591,716
1-5 years		126,826,820		147,705,129
5+ years		39,685,962		-
	$	177,657,426	$	171,398,738

The following table details our remaining contractual maturity for our interest rate swaps. The amounts represent the future undiscounted cash flows of the financial liability based on the earliest date on which we can be required to pay.

	As of December 31
	2011		2010
Less than 1 month	$	-	$	-
1-3 months		-		-
3 months to 1 year		238,281		-
1-5 years		468,727		-
5+ years		-		-
	$	707,008	$	-

24. Subsequent events

January 2012 restricted stock issuance

On January 31, 2012, we issued 281,000 shares of restricted stock to the employees for no cash consideration. The share price at the date of issue was $5.65 per share. The vesting schedule of the restricted stock is (i) one-third of the shares vest on January 31, 2013, (ii) one-third of the shares vest on January 31, 2014, and (iii) one-third of the shares vest on January 31, 2015. Compensation expense will be recognized ratably over the vesting periods for each tranche using the straight-line method.

On January 31, 2012, we issued 9,000 shares of restricted stock to our independent directors for no cash consideration. The share price at the date of issue was $5.65 per share. These shares vest on January 31, 2013.

Time chartered-in vessels

In February 2012, we agreed to charter-in a 2009 built MR product tanker (46,697 DWT), the Pacific Duchess. The vessel will be chartered-in for one year at $13,800 per day and was delivered on March 17, 2012. The agreement includes an option to extend the charter for an additional year at $14,800 per day.

In February 2012, we agreed to charter-in a 2007 built MR product tanker (49,999 DWT), the Targale. The vessel will be chartered in for two years at $14,500 per day and is expected to be delivered in May 2012. The agreement includes three consecutive options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.

In March 2012, we agreed to charter-in a 2010 built MR product tanker (46,697 DWT), the Pacific Marchioness. The vessel will be chartered-in for one year at $13,900 per day and is expected to be delivered in April 2012. The agreement includes an option to extend the charter for an additional year at $14,900 per day.

In March 2012, we agreed to charter-in a 2007 built MR product tanker (46,161 DWT), the STX Ace6. The vessel will be chartered-in for two years at $14,150 per day and is expected to be delivered in May 2012. The agreement includes an option to extend the charter for an additional year at $15,150 per day.

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Scorpio Tankers Inc. and Subsidiaries

Notes to the consolidated financial statements

In March 2012, we agreed to charter-in a 2012 built MR product tanker (50,385 DWT), the Freja Lupus. The vessel will be chartered-in for two years at $14,760 per day and is expected to be delivered in April, 2012. The agreement includes an option to extend the charter for an additional year at $16,000 per day.

Vessel sales

In February 2012, we entered into agreements to sell three of our Handymax vessels: the STI Conqueror for $21.0 million, the STI Gladiator for $16.2 million, and the STI Matador for $16.2 million. The sale of the STI Conqueror closed on March 20, 2012 and the sales of the STI Gladiator and STI Matador are expected to close in April 2012. We have received deposits of 10% of the purchase price on the sales of the STI Gladiator and STI Matador as of the date of this report. In connection with these sales, the availability of the Company's 2010 Credit Facility will decrease by approximately $31.0 million.

As part of the sale of all three vessels, the Company will record a $4.0 million loss on disposal in the first quarter of 2012. Additionally, approximately $0.5 million of deferred financing fees attributable to the 2010 Revolving Credit Facility will be written off upon closing of the sale.

Newbuilding vessel

In February 2012, we signed a contract with Hyundai to construct a newbuilding vessel for $36.0 million, which is our seventh MR newbuilding product tanker with Hyundai. The seventh newbuilding is scheduled to be delivered in April 2013.

Our commitments under all newbuilding vessel agreements, including the seventh newbuilding are as follows:

Q1 2012	$	22,302,750	*
Q2 2012		22,202,200
Q3 2012		113,845,675
Q4 2012		7,240,000
Q1 2013		21,840,000
Q2 2013		21,600,000
	$	209,030,625

* This amount has been fully paid as of the date of this annual report.

F-39

SCORPIO TANKERS INC.

EX-4.1

Execution Version

Date: as of July 12, 2011

SCORPIO TANKERS INC.

as Borrower

NOEMI SHIPPING COMPANY LIMITED,

SENATORE SHIPPING COMPANY LIMITED,

VENICE SHIPPING COMPANY LIMITED,

STI CONQUEROR SHIPPING COMPANY LIMITED,

STI GLADIATOR SHIPPING COMPANY LIMITED,

STI HARMONY SHIPPING COMPANY LIMITED,

STI HERITAGE SHIPPING COMPANY LIMITED,

STI HIGHLANDER SHIPPING COMPANY LIMITED

and

STI MATADOR SHIPPING COMPANY LIMITED

as Joint and Several Guarantors

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 2

as Swap Banks

NORDEA BANK FINLAND PLC, NEW YORK BRANCH

as Agent

and as Security Trustee

– and –

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lead Arrangers

AMENDED AND RESTATED LOAN AGREEMENT

in respect of the Loan Agreement dated as of June 2, 2010

INDEX

Clause		Page
1	INTERPRETATION	2
2	FACILITY	26
3	POSITION OF THE LENDERS and swap banks	27
4	DRAWDOWN	28
5	INTEREST	30
6	INTEREST PERIODS	32
7	DEFAULT INTEREST	33
8	REPAYMENT, PREPAYMENT, reduction and cancellation	34
9	CONDITIONS PRECEDENT; effect of this agreement	37
10	REPRESENTATIONS AND WARRANTIES	39
11	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS	46
12	FINANCIAL COVENANTS	54
13	MARINE INSURANCE COVENANTS	54
14	SHIP COVENANTS	60
15	COLLATERAL MAINTENANCE RATIO	64
16	guarantee	65
17	PAYMENTS AND CALCULATIONS	69
18	APPLICATION OF RECEIPTS	71
19	APPLICATION OF EARNINGS, sale proceeds and insurance proceeds	73
20	EVENTS OF DEFAULT	74
21	FEES AND EXPENSES	78
22	INDEMNITIES	79
23	NO SET-OFF OR TAX DEDUCTION	81
24	ILLEGALITY, ETC	83

INDEX

Clause		Page
25	INCREASED COSTS	84
26	SET-OFF	86
27	TRANSFERS AND CHANGES IN LENDING OFFICES	86
28	VARIATIONS AND WAIVERS	90
29	NOTICES	91
30	SUPPLEMENTAL	93
31	THE SERVICING BANKS	94
32	LAW AND JURISDICTION	98
33	WAIVER OF JURY TRIAL	99
34	PATRIOT ACT notice	99

EXECUTION PAGE	101
SCHEDULE 1  LENDERS AND COMMITMENTS	103
SCHEDULE 2  SWAP BANKS	104
SCHEDULE 3  DRAWDOWN NOTICE	105
SCHEDULE 4  CONDITION PRECEDENT DOCUMENTS	107
SCHEDULE 5  TRANSFER CERTIFICATE	114
SCHEDULE 6  DESIGNATION NOTICE	118
SCHEDULE 7  list of approved brokers	119
SCHEDULE 8  guarantor accession agreement	120
SCHEDULE 9  lender accession agreement	122
SCHEDULE 10  swap bank accession agreement	126
appendix A  FORM OF CHARTER ASSIGNMENT	131
appendix b  FORM OF COMPLIANCE CERTIFICATE	132
appendix c  FORM OF EARNINGS ACCOUNT PLEDGE	133
appendix d  FORM OF EARNINGS ASSIGNMENT	134

ii

INDEX

Clause	Page
appendix e  FORM OF INSURANCE ASSIGNMENT	135
appendix f  FORM OF MANAGER’S UNDERTAKING	136
appendix g  FORM OF MARShALL ISLANDS SHIP MORTGAGE	137
appendix h  FORM OF NOTE	138
appendix i  FORM OF RETENTION ACCOUNT PLEDGE	139
appendix j  FORM OF SHAREs PLEDGE	140

iii

THIS AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is made as of July 12, 2011

AMONG

(1)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as borrower (the “Borrower”);
(2)	NOEMI SHIPPING COMPANY LIMITED, SENATORE SHIPPING COMPANY LIMITED, VENICE SHIPPING COMPANY LIMITED, STI CONQUEROR SHIPPING COMPANY LIMITED, STI GLADIATOR SHIPPING COMPANY LIMITED, STI HARMONY SHIPPING COMPANY LIMITED, STI HERITAGE SHIPPING COMPANY LIMITED, STI HIGHLANDER SHIPPING COMPANY LIMITED and STI MATADOR SHIPPING COMPANY LIMITED, each a corporation incorporated and existing under the laws of the Republic of The Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several guarantors (together with any other person that becomes a guarantor party hereto pursuant to a Guarantor Accession Agreement (as defined below), the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (together with any other person that becomes a lender party hereto pursuant to a Lender Accession Agreement (as defined below), the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as swap banks (together with any other person that becomes a swap bank party hereto pursuant to a Swap Bank Accession Agreement (as defined below), the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(6)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as security trustee for the Lenders and the Swap Banks (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(7)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. (as successor-in-interest to Fortis Bank (Nederland) N.V.) as lead arrangers (the “Lead Arrangers”, which expression includes their respective successors, transferees and assigns).

1

BACKGROUND

(A)	Pursuant to a Loan Agreement dated as of June 2, 2010 (the “Original Loan Agreement”), the Lenders made available to the Borrower a senior term loan facility (the “Term Loan Facility”) upon the terms and conditions stated therein.
(B)	Upon the terms and conditions of this Agreement, the parties hereto have agreed to amend and restate the Original Loan Agreement to, among other things, convert the Term Loan Facility into a reducing, revolving credit facility.
(C)	At their discretion, the Swap Banks may make available to the Borrower interest rate swap transactions from time to time to hedge the Borrower’s exposure under this Agreement to interest rate fluctuations.
(D)	The Lenders and the Swap Banks have agreed to share in the Collateral granted under the Original Loan Agreement and to be granted to the Security Trustee pursuant to this Agreement with the interest of the Swap Banks being secured on a subordinated basis.

IT IS AGREED as follows:

1	INTERPRETATION
1.1	Definitions. Subject to Clause 1.5, in this Agreement:
	“Acceptable Accounting Firm” means Deloitte LLP, or such other recognized accounting firm as the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld or delayed), approve from time to time in writing;
	“Acceptable Ship” means any vessel which:

(a)	is either a clean or crude oil double-hull tanker;
(b)	with a deadweight tonnage between 35,000 dwt and 200,000 dwt;
(c)	no older than seven (7) years of age on its Delivery Date;
(d)	is classed with a Classification Society, free of overdue recommendations and conditions affecting that vessel’s class; and
(e)	was built by a shipyard approved by the Majority Lenders;

“Account Bank” means ABN AMRO BANK N.V., acting through its office at Coolsingel 93, P.O. Box 749, 3000 AS Rotterdam, The Netherlands;

“Advance” means the principal amount of each borrowing by the Borrower under this Agreement;

2

“Affiliate” means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise;

“Agreed Form” means in relation to any document, that document in the form approved by the Agent with the consent of the Majority Lenders (such consent not to be unreasonably withheld), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;

“Approved Broker” means any of the companies listed on Schedule 7 or such other company proposed by the Borrower which the Agent may approve from time to time for the purpose of valuing a Ship, who shall act as an expert and not as arbitrator and whose valuation shall be conclusive and binding on all parties to this Agreement;

“Approved Flag” means the Bahamian, Cypriot, Maltese, Marshall Islands, Liberian, Panamanian or Singaporean flag or such other flag as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Ship shall be registered;

“Approved Management Agreement” means, in relation to a Ship in respect of its commercial and technical management, a management agreement which the Agent may reasonably approve and which shall be on the BIMCO Shipman 98 form or such other form of management agreement, in each case between the Borrower or the Guarantor that owns a Ship and each Approved Manager;

“Approved Manager” means each of SSM, SCM, V. Ships Ship Management and Columbia Shipmanagement Ltd. or any other company proposed by the Borrower which the Agent may reasonably approve from time to time as the technical and/or commercial manager of a Ship;

“Availability Period” means the period commencing on the Effective Date and ending on:

(a)	the date falling one (1) month before the Termination Date (or such later date as the Agent may, with the authorization of the Majority Lenders, agree with the Borrower); or
(b)	if earlier, the date on which the Total Commitments are fully cancelled or terminated;

“Available Commitment” means, in relation to a Lender and at any time, its Commitment less its Contribution at that time (and “Total Available Commitments” means the aggregate of the Available Commitments of all the Lenders);

“Bank Secrecy Act” has the meaning given in Clause 10.21;

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“Basel III” means any of the changes designed to strengthen any capital standards or introduce minimum liquidity or other requirements referenced in the publication of the Groups of Governors and Heads of Supervision of the Basel Committee on Banking Supervision (the “Basel Committee”) dated 16 December, 2010, or any subsequent paper or document published by the Basel Committee on any of those requirements;

“Business Day” means a day on which banks are open in London and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City and Amsterdam, The Netherlands;

“Capitalized Lease” means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with IFRS, is required to be capitalized on the balance sheet of such person; and “Capitalized Lease Obligation” is defined to mean the rental obligations, as aforesaid, under a Capitalized Lease;

“Cash Equivalents” means:

(a)	securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)	time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)	such other securities or instruments as the Majority Lenders shall agree in writing;

and in respect of both (a) and (b) above, with a Rating Category of at least “A+” by S&P and “A” by Moody’s (or the equivalent used by another Rating Agency) in each case having maturities of not more than ninety (90) days from the date of acquisition;

“Change of Control” means, in respect of the Borrower:

(a)

a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than any holders of the Borrower’s Equity Interests as of the date of this Agreement, becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act and including by reason of any change in the ultimate “beneficial ownership” of the Equity Interests of the Borrower) of more than 35% of the total voting power of the Voting Stock of the Borrower (calculated on a fully diluted basis); or

(b)

individuals who at the beginning of any period of two consecutive calendar years constituted the Board of Directors or equivalent governing body of the Borrower (together with any new directors (or equivalent) whose election by such Board of Directors or equivalent governing body or whose nomination for election was approved by a vote of at least two-thirds of the members of such Board of Directors or equivalent governing body then still in office who either were members of such Board of Directors or equivalent governing body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least 50% of the members of such Board of Directors or equivalent governing body then in office;

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“Charter” means, in relation to a Ship, a time or consecutive voyage charter in respect of such Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

“Charter Assignment” means, in relation to a Ship, an assignment of the Charter for such Ship, in the form set out in Appendix A;

“CISADA” means the United States Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010;

“Classification Society” means, in relation to a Ship, American Bureau of Shipping, Det Norske Veritas, Korean Register of Shipping or such other first-class vessel classification society that is a member of the International Association of Classification Societies that the Agent may approve from time to time;

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Collateral” means all property (including, without limitation, any proceeds thereof) referred to in the Finance Documents that is subject to any Security Interest in favor of the Security Trustee, for the benefit of the Lenders and the Swap Banks, securing the Secured Liabilities;

“Collateral Maintenance Ratio” has the meaning given in Clause 15.2;

“Commission” or “SEC” means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act;

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate or Lender Accession Agreement, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Compliance Certificate” means a certificate executed by an authorized person of the Borrower, in the form set out in Appendix B;

“Confirmation” and “Early Termination Date”, in relation to any continuing Designated Transaction, have the meanings given in the relevant Master Agreement;

“Consolidated EBITDA” means, for any accounting period, the consolidated net income of the Borrower for that accounting period:

(a) plus, to the extent deducted in computing the net income of the Borrower for that accounting period, the sum, without duplication, of:

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(i)	all federal, state, local and foreign income taxes and tax distributions;
(ii)	Consolidated Net Interest Expense;
(iii)	depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)	expenses incurred in connection with a special or intermediate survey of a Ship during such period; and
(v)	any drydocking expenses;

(b) minus, to the extent added in computing the consolidated net income of the Borrower for that accounting period, (i) any non-cash income or non-cash gains and (ii) any extraordinary gains on asset sales not incurred in the ordinary course of business;

“Consolidated Funded Debt” means, for any accounting period, the sum of the following for the Borrower determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:

(a)	all Financial Indebtedness; and
(b)	all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet);

provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt;

“Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents, in each case held by the Borrower on a freely available and unencumbered basis;

“Consolidated Net Interest Expense” means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Borrower and all of its subsidiaries during the relevant accounting period less (i) interest income received and (ii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Borrower;

“Consolidated Tangible Net Worth” means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Borrower, minus goodwill;

“Consolidated Total Capitalization” means Consolidated Tangible Net Worth plus Consolidated Funded Debt;

“Contractual Currency” has the meaning given in Clause 22.4;

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“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Security Trustee, any Lender, any Swap Bank or any Lead Arranger, whether as at the date of this Agreement or at any later time;

“Deed of Covenant” means a deed of covenant in Agreed Form collateral to a Mortgage that is in statutory form;

“Delivery Date” has the meaning given in Clause 9.2(b);

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a)	it is entered into by the Borrower pursuant to a Master Agreement with a Swap Bank;
(b)	its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Termination Date; and
(c)	it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 6, as a Designated Transaction for the purposes of the Finance Documents;

“Disbursement Authorization” has the meaning given in Clause 9.2(b);

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrower for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Guarantor owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) except to the extent that they fall within paragraph (b):

(i)	all freight, hire and passage moneys;
(ii)	compensation payable to the Guarantor owning that Ship or the Security Trustee in the event of requisition of that Ship for hire;
(iii)	remuneration for salvage and towage services;

(iv)	demurrage and detention moneys;
(v)	damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
(vi)	all moneys which are at any time payable under Insurances in respect of loss of hire; and

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(b) if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;

“Earnings Account” means, in relation to a Ship, an account in the name of the Guarantor owning such Ship with the Account Bank and designated as the “Earnings Account” for such Ship, or any other account (with the Account Bank or the Agent or with another bank or financial institution acceptable to the Agent) which is designated as the Earnings Account in relation to that Ship for the purposes of this Agreement;

“Earnings Account Pledge” means a pledge of an Earnings Account, in the form set out in Appendix C;

“Earnings Assignment” means an assignment of the Earnings and any Requisition Compensation of a Ship, in the form set out in Appendix D;

“EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system maintained by the SEC;

“Effective Date” has the meaning given in Clause 9.1;

“Email” has the meaning given in Clause 29.1;

“Environmental Claim” means:

(a)	any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
(b)	any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

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(b)

any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision or an allision between a Ship and such other vessel or object or some other incident of navigation or operation, in either case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Borrower and/or the Guarantor owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c)

any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Borrower and/or the Guarantor owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Equity Interests” of any person means:

(a)	any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)	all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person;

“Equity Proceeds” means the net cash proceeds from the issuance of common or preferred stock of the Borrower;

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder;

“ERISA Affiliate” means a trade or business (whether or not incorporated) that, together with the Borrower or any subsidiary of it, would be deemed to be a single employer under Section 414 of the Code;

“ERISA Funding Event” means:

(a) any failure by any Plan to satisfy the minimum funding standards (for purposes of Section 412 of the Code or Section 302 of ERISA), whether or not waived;

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(b)	the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(c)	the failure by the Borrower or any subsidiary of it or any ERISA Affiliate to make any required contribution to a Multiemployer Plan;
(d)	a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code);
(e)	the incurrence by the Borrower or any subsidiary of it or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(f)	a determination that a Multiemployer Plan is, or is expected to be, in endangered status within the meaning of Section 432 of the Code or Section 305 of ERISA;

“ERISA Termination Event” means:

(a)	the imposition of any lien in favor of the PBGC of any Plan or Multiemployer Plan;
(b)	the receipt by the Borrower or any subsidiary of it or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA;
(c)	the receipt by the Borrower or any subsidiary of it or ERISA Affiliate of any notice that a Multiemployer Plan is in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA;
(d)	the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA; or
(e)	the occurrence of any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan;

“Estate” has the meaning assigned such term in Clause 31.1(b)(ii);

“Event of Default” means any of the events or circumstances described in Clause 20.1;

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Executive Order” means an executive order issued by the President of the United States of America;

“Fair Market Value” means, in relation to each Ship, the market value of such Ship at any date that is shown by the average of two (2) valuations each prepared and addressed to the Agent:

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(a)	as at a date not more than 30 days prior to the date such valuation is delivered to the Agent;
(b)	by an Approved Broker;
(c)	with or without physical inspection of that Ship (as the Agent may require); and
(d)	on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (and with no value to be given to any pooling arrangements);

“Fee Letter” means the letter dated July 7, 2011 from the Lead Arrangers to the Borrower;

“Finance Documents” means:

(a)	this Agreement;
(b)	all Charter Assignments;
(c)	all Earnings Account Pledges;
(d)	all Earnings Assignments;
(e)	all Insurance Assignments;
(f)	all Mortgages and, if applicable, the Deed of Covenant collateral thereto;
(g)	the Note;
(h)	the Retention Account Pledge;
(i)	all Shares Pledges; and
(j)	any other document (whether creating a Security Interest or not) which is executed at any time by any person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders and/or the Swap Banks under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, with respect to any person (the “debtor”) at any date of determination (without duplication):

(a)	all obligations of the debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
(b)	all obligations of the debtor evidenced by bonds, debentures, notes or other similar instruments;

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(c)	all obligations of the debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the debtor (including reimbursement obligations with respect thereto);
(d)	all obligations of the debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)	all Capitalized Lease Obligations of the debtor as lessee;
(f)	all Financial Indebtedness of persons other than the debtor secured by a Security Interest on any asset of the debtor, whether or not such Financial Indebtedness is assumed by the debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness; and
(g)	all Financial Indebtedness of persons other than the debtor under any guarantee, indemnity or similar obligation entered into by the debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the debtor.

The amount of Financial Indebtedness of any debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time as determined in conformity with IFRS, and (ii) Financial Indebtedness shall not include any liability for federal, state, local, foreign or other taxes;

“Fiscal Year” means, in relation to any person, each period of one (1) year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared;

“Guaranteed Obligations” has the meaning given in Clause 16.1;

“Guarantor Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Guarantor in the form set out in Schedule 8 hereto;

“IFRS” means International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);

“Initial Ships” means, collectively, the NOEMI, SENATORE, VENICE, STI CONQUEROR, STI GLADIATOR, STI HARMONY, STI HERITAGE, STI HIGHLANDER and STI MATADOR, and in the singular means any one of them;

“Insurances” means in relation to a Ship:

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(a)	all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, the Earnings or otherwise in relation to that Ship; and
(b)	all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Insurance Assignment” means, in relation to a Ship, an assignment of the Insurances, in the form set out in Appendix E;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISM Code Documentation” includes, in respect of a Ship:

(a)	the Document of Compliance and Safety Management Certificate issued pursuant to the ISM Code in relation to that Ship within the periods specified by the ISM Code;
(b)	all other documents and data which are relevant to the safety management system and its implementation and verification which the Agent may require; and
(c)	any other documents which are prepared or which are otherwise relevant to establish and maintain that Ship’s compliance or the compliance of the Guarantor that owns that Ship or the relevant Approved Manager with the ISM Code which the Agent may require;

“ISPS Code” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time;

“ISPS Code Documentation” includes:

(a)	the ISSC; and
(b)	all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Lender Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Lender in the form set out in Schedule 9 hereto;

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“Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” under its name on Schedule 1 or in the relevant Transfer Certificate or other instrument pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent;

“LIBOR” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:

(a)	the applicable Screen Rate; or
(b)	if no Screen Rate is available for that period, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards to four (4) decimal places) of the rates, as supplied to the Agent at its request, quoted by each Reference Bank to leading banks in the London Interbank Market;

as of 11:00 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period;

“Loan” means the principal amount from time to time outstanding under this Agreement;

“Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency;

“Majority Lenders” means:

(a)	before the Loan has been made, Lenders whose Commitments total 66.66% of the Total Commitments; and
(b)	after the Loan has been made, Lenders whose Contributions total 66.66% of the Loan;

“Manager’s Undertaking” means, in relation to a Ship, the letter executed and delivered by each Approved Manager, in the form set out in Appendix F;

“Margin” means:

(a)	3.00% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than or equal to 50%; and
(b)	3.50% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve System and any successor regulations thereto, as in effect from time to time;

“Master Agreement” means each master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) in the Agreed Form made between the Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

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“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors;

“Mortgage” means, in relation to a Ship, the first priority or preferred ship mortgage on that Ship, in Agreed Form; provided that a mortgage in respect of a Ship registered on Marshall Islands flag shall be in the form set out in Appendix G;

“Multiemployer Plan” means, at any time, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any subsidiary of it or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;

“Net Debt” means Consolidated Funded Debt less cash and Cash Equivalents;

“NOEMI” means the 2004-built, double hull Panamax product carrier of 72,515 deadweight tons registered in the ownership of Noemi Shipping Company Limited under Marshall Islands flag with the name “NOEMI”, Official Number 2335 and IMO Number 9286023;

“Non-Consenting Lender” has the meaning given in Clause 3.5(c);

“Non-indemnified Tax” means any tax on the net income of a Creditor Party (but not a tax on gross income or individual items of income), whether collected by deduction or withholding or otherwise, which is levied by a taxing jurisdiction which:

(a)	is located in the country under whose laws such entity is formed (or in the case of a natural person is a country of which such person is a citizen); or
(b)	with respect to any Lender, is located in the country of its Lending Office; or
(c)	with respect to any Creditor Party other than a Lender, is located in the country from which such party has originated its participation in this transaction;

“Note” means a promissory note of the Borrower, payable to the order of the Agent, evidencing the aggregate indebtedness of the Borrower under this Agreement, in the form set out in Appendix H;

“Notifying Lender” has the meaning given in Clause 24.1 or Clause 25.1 as the context requires;

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury;

“pari passu”, when used with respect to the ranking of any Financial Indebtedness of any person in relation to other Financial Indebtedness of such person, means that each such Financial Indebtedness:

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(a)	either (i) is not subordinated in right of payment to any other Financial Indebtedness of such person or (ii) is subordinate in right of payment to the same Financial Indebtedness of such person as is the other and is so subordinate to the same extent;  and
(b)	is not subordinate in right of payment to the other or to any Financial Indebtedness of such person as to which the other is not so subordinate;

“PATRIOT Act” has the meaning given in Clause 9.1;

“Payment Currency” has the meaning given in Clause 22.4;

“PBGC” means the Pension Benefits Guarantee Corporation and its successors;

“Permitted Security Interests” means:

(a)	Security Interests created by the Finance Documents;
(b)	pledges of certificates of deposit or other cash collateral securing any Security Party’s reimbursement obligations in connection with letters of credit now or hereafter issued for the account of such Security Party in connection with the establishment of the financial responsibility of such Security Party under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the case may be, as the same may be amended or replaced;
(c)	Security Interests to secure obligations under workmen’s compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen’s or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which the Borrower or a Guarantor is the principal, as to all of the foregoing, only to the extent arising and continuing in the ordinary course of business;
(d)	Security Interests for loss, damage or expense which are fully covered by insurance, subject to applicable deductibles satisfactory to the Mortgagee;
(e)	Security Interests for unpaid master’s and crew’s wages in accordance with usual maritime practice;
(f)	Security Interests for salvage;
(g)	Security Interests arising by operation of law for not more than two (2) months’ prepaid hire under any charter or other contract of employment in relation to the Ship not prohibited by this Agreement or any other Finance Document;
(h)	Security Interests for master’s disbursements incurred in the ordinary course of trading and any other Security Interests arising by operation of law or otherwise in the ordinary course of its business, provided such Security Interests do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower or the Guarantor that owns such Ship in good faith by appropriate steps) and subject, in the case of Security Interests for repair or maintenance, to Clause 14.13(g);

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(i)	any Security Interest created in favor of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the relevant Security Party is actively prosecuting or defending such proceedings or arbitration in good faith and such Security Interest does not (and is not likely to) result in any sale, forfeiture or loss of the Ship;
(j)	Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; and
(k)	other liens, charges and encumbrances incidental to the conduct of the business of each such party, the ownership of any such party’s property and assets and which do not in the aggregate materially detract from the value of each such party’s property or assets or materially impair the use thereof in the operation of its business;

“Pertinent Document” means:

(a)	any Finance Document;
(b)	any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;
(c)	any other document contemplated by or referred to in any Finance Document; and
(d)	any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a)	the jurisdiction under the laws of which the company is incorporated or formed;
(b)	a jurisdiction in which the company has the center of its main interests or in which the company’s central management and control is or has recently been exercised;
(c)	a jurisdiction in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
(d)	a jurisdiction in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; or
(e)	a jurisdiction the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company whether as a main or territorial or ancillary proceedings or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (a) or (b) above;

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“Pertinent Matter” means:

(a)	any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or
(b)	any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Plan” means any employee benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which the Borrower or any subsidiary of it or ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice and/or, the lapse of time, would constitute an Event of Default;

“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed;

“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is two (2) Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);

“Rating Agencies” means:

(a)	S&P and Moody’s; or
(b)	if S&P or Moody’s or both of them are not making ratings of securities publicly available, a nationally recognized United States rating agency or agencies, as the case may be, selected by the Agent with the consent of the Majority Lenders, which will be substituted for S&P or Moody’s or both, as the case may be;

“Rating Category” means:

(a) with respect to S&P, any of the following categories (any of which may include a “+” or “-”):  AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);

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(b)	with respect to Moody’s, any of the following categories:  Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(c)	the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable;

“Reference Banks” means the reference banks chosen from time to time by the British Bankers’ Association;

“Replacement Ship” has the meaning given in Clause 8.8(c);

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsections 22, 23, 25, 27, or 28 of PBGC Regulation Section 4043;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Retention Account” means an account in the name of the Borrower with the Agent in New York designated “Scorpio Tankers - Retention Account”, or any other account (with that or another office of the Agent or with another bank or financial institution acceptable to the Agent) which is designated as the Retention Account for the purposes of this Agreement;

“Retention Account Pledge” means a pledge of the Retention Account, in the form set out in Appendix I;

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies Inc., and its successors;

“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

(a)	imposed by law or regulation of the Council of the European Union, the United Nations or its Security Council;
(b)	under CISADA;
(c)	in respect of (i) a “national” of any “designated foreign country”, within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the United States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as amended, or (ii) a “specially designated national” listed by OFAC or any regulations or rulings issued thereunder; or
(d)	otherwise imposed by any law or regulation or Executive Order by which any Creditor Party, the Borrower or any Guarantor is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Creditor Party, the Borrower or any Guarantor, including without limitation laws or regulations or Executive Orders restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there;

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provided that the laws and regulations described in paragraphs (a) and (d) shall be applicable only to the extent such laws and regulations are not inconsistent with the laws and regulations of the United States of America;

“SCM” means Scorpio Commercial Management S.A.M., a Monaco company, as commercial manager of the Ships;

“Screen Rate” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the British Bankers’ Association Interest Settlement Rate for the relevant currency and period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Majority Lenders;

“Secured Liabilities” means all liabilities which the Borrower, the other Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Securities Act” means the United States Securities Act of 1933, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Security Interest” means:

(a)	a mortgage, encumbrance, charge (whether fixed or floating) or pledge, any maritime or other lien, privilege or any other security interest of any kind;
(b)	the security rights of a plaintiff under an action in rem; and
(c)	any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Borrower, each Guarantor and any other person (except a Creditor Party) who, as a surety, guarantor mortgagor, assignor or pledgor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a Finance Document;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which:

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(a)	all amounts which have become due for payment by the Borrower or any other Security Party under the Finance Documents and the Master Agreements have been paid;
(b)	no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or any Master Agreement; and
(c)	neither the Borrower nor any other Security Party has any liability under Clause 21, 22 or 23 or any other provision of this Agreement or another Finance Document or a Master Agreement;

“SENATORE” means the 2004-built, double hull Panamax product carrier of 72,514 deadweight tons registered in the ownership of Senatore Shipping Company Limited under Marshall Islands flag with the name “SENATORE”, Official Number 2334 and IMO Number 9282998;

“Servicing Bank” means, as the context may require, the Agent or the Security Trustee;

“Shares Pledge” means a pledge of the Equity Interests of each Guarantor, in the form set out in Appendix J;

“Ship” means, as the context may require:

(a)	any Initial Ship;
(b)	any Replacement Ship; and
(c)	any Substitute Collateral Ship;

“SSM” means Scorpio Ship Management S.A.M., a Monaco company, as technical manager of the Ships;

“STI CONQUEROR” means the 2005-built, double hull Handymax product carrier of 40,158 deadweight tons registered in the ownership of STI Conqueror Shipping Company Limited under Marshall Islands flag with the name “STI CONQUEROR”, Official Number 3942, IMO Number 9293985;

“STI GLADIATOR” means the 2003-built, double hull Handymax product carrier of 40,083 deadweight tons registered in the ownership of STI Gladiator Shipping Company Limited under Marshall Islands flag with the name “STI GLADIATOR”, Official Number 3944, IMO Number 9241827;

“STI HARMONY” means the 2007-built, double hull Panamax product carrier of 73,919 deadweight tons registered in the ownership of STI Harmony Shipping Company Limited under Marshall Islands flag with the name “STI HARMONY”, Official Number 4214, IMO Number 9334557;

“STI HERITAGE” means the 2008-built, double hull Panamax product carrier of 73,919 deadweight tons registered in the ownership of STI Heritage Company Limited under Marshall Islands flag with the name “STI HERITAGE”, Official Number 4215, IMO Number 9334569;

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“STI HIGHLANDER” means the 2007-built, double hull Handymax product carrier of 37,145 deadweight tons registered in the ownership of STI Highlander Shipping Company Limited under Marshall Islands flag with the name “STI HIGHLANDER”, Official Number 3945, IMO Number 9334789;

“STI MATADOR” means the 2003-built, double hull Handymax product carrier of 40,096 deadweight tons registered in the ownership of STI Matador Shipping Company Limited under Marshall Islands flag with the name “STI MATADOR”, Official Number Official Number 3943, IMO Number 9235701;

“Substitute Collateral Ship” has the meaning given in clause 8.9(b);

“Swap Bank Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Swap Bank in the form set out in Schedule 10 hereto;

“Swap Counterparty” means, at any relevant time and in relation to a continuing Designated Transaction, the Swap Bank which is a party to that Designated Transaction;

“Swap Exposure” means, as at any relevant date and in relation to a Swap Counterparty, the amount certified by the Swap Counterparty to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Counterparty under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement entered into by the Swap Counterparty with the Borrower if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Counterparty;

“Termination Date” means June 2, 2015;

“Total Loss” means in relation to a Ship:

(a)	actual, constructive, compromised, agreed or arranged total loss of that Ship;
(b)	any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, unless it is within one (1) month redelivered to the full control of the Guarantor owning that Ship; or
(c)	any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless it is within one (1) month redelivered to the full control of the Guarantor owning that Ship;

“Total Loss Date” means in relation to a Ship:

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(a)	in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)	in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earliest of:

(i)	the date on which a notice of abandonment is given to the insurers; and
(ii)	the date of any compromise, arrangement or agreement made by or on behalf of the Guarantor owning that Ship with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

	“Transaction” has the meaning given in each Master Agreement;
	“Transfer Certificate” has the meaning given in Clause 27.2;
	“Transferee Lender” has the meaning given in Clause 27.2;
	“Transferor Lender” has the meaning given in Clause 27.2;
	“UCC” means the Uniform Commercial Code of the State of New York;
	“VENICE” means the 2001-built, double hull Panamax crude carrier of 81,409 deadweight tons registered in the ownership of Venice Shipping Company Limited under Marshall Islands flag with the name “VENICE”, Official Number 2060 and IMO Number 9179634; and
	“Voting Stock” of any person as of any date means the Equity Interests of such person that is at the time entitled to vote in the election of the board of directors or similar governing body of such person.
1.2	Construction of certain terms. In this Agreement:
	“approved” means, for the purposes of Clause 13, approved in writing by the Agent;
	“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
	“company” includes any corporation, limited liability company, partnership, joint venture, unincorporated association, joint stock company and trust;
	“consent” includes an authorization, consent, approval, resolution, license, exemption, filing, registration, notarization and legalization;

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“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, Email or fax;

“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the United States of America, any state thereof, the Council of the European Union, the European Commission, the United Nations or its Security Council or any other Pertinent Jurisdiction;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Guarantor owning that Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes natural persons; any company; any state, political sub-division of a state and local or municipal authority; and any international organization;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline, whether or not having the force of law, of any governmental body, intergovernmental or supranational, agency, department or regulatory, self-regulatory or other authority or organization;

“subsidiary” has the meaning given in Clause 1.4;

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	“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganization of it or any other person;
	“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and
	“war risks” includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3	Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a)	on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)	on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
	and “month” and “monthly” shall be construed accordingly.
1.4	Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:
(a)	a majority of the issued Equity Interests in S (or a majority of the issued Equity Interests in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
(b)	P has direct or indirect control over a majority of the voting rights attaching to the issued Equity Interests of S; or
(c)	P has the direct or indirect power to appoint or remove a majority of the directors (or equivalent) of S; or
(d)	P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;
	and any company of which S is a subsidiary is a parent company of S.
1.5	General interpretation. In this Agreement:

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(a)	references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
(b)	references in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent approves or reasonably requires and which are acceptable to the Borrower;
(c)	references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
(d)	words denoting the singular number shall include the plural and vice versa; and
(e)	Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6	Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
1.7	Accounting terms. Unless otherwise specified herein, all accounting terms used in this Agreement and in the other Finance Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to any Creditor Party under this Agreement shall be prepared, in accordance with IFRS as from time to time in effect.
1.8	Inferences regarding materiality. To the extent that any representation, warranty, covenant or other undertaking of the Borrower, a Guarantor or any other Security Party in this Agreement or any other Finance Document is qualified by reference to those matters which are not reasonably expected to result in a “material adverse effect” or language of similar import, no inference shall be drawn therefrom that any Creditor Party has knowledge or approves of any noncompliance by such party with any law or regulation.
2	FACILITY
2.1	Amount of facility. Subject to the other provisions of this Agreement, the Lenders severally agree to make available to the Borrower a revolving credit facility in the principal amount of up to $137,039,072.
2.2	Lenders’ participations in Advances. Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments, provided that no Lender shall be required to participate in any Advance if doing so would require such Lender to exceed its Commitment.
2.3	Purpose of Advances. The Borrower undertakes with each Creditor Party to use each Advance only (a) to refinance the current amounts outstanding under the Original Loan Agreement and/or (b) for general corporate purposes.

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3	POSITION OF THE LENDERS and swap banks
3.1	Interests several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several.
3.2	Individual right of action. Each Lender and each Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement or under a Master Agreement without joining the Agent, the Security Trustee, any other Lender or any other Swap Bank as additional parties in the proceedings.
3.3	Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against the Borrower or any other Security Party in connection with a Finance Document or a Master Agreement without the prior consent of the Majority Lenders.
3.4	Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under any Master Agreement to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:
(a)	the obligations of the other Lenders or Swap Banks being increased; nor
(b)	the Borrower, any other Security Party, any other Lender or any other Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document or under any Master Agreement,
	and in no circumstances shall a Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or a Master Agreement.
3.5	Replacement of a Lender.
(a)	If at any time:

(i)	any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or
(ii)	the Borrower or any other Security Party becomes obliged in the absence of an Event of Default to repay any amount in accordance with Clause 24 or to pay additional amounts pursuant to Clause 23 or Clause 25 to any Lender in excess of amounts payable to other Lenders generally,

then the Borrower may, on 30 Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrower, which is acceptable to the Agent with the consent of the Majority Lenders (other than the Lender the Borrower desires to replace), which confirms its willingness to assume and by its execution of a Transfer Certificate does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Advances and all accrued interest and/or breakages costs and other amounts payable in relation thereto under the Finance Documents.

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(b) The replacement of a Lender pursuant to this Clause 3.5 shall be subject to the following conditions:

(i)	the Borrower shall have no right to replace the Agent or the Security Trustee;
(ii)	neither the Agent nor any Lender shall have any obligation to the Borrower to find a Replacement Lender;
(iii)	in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 30 days after the date the Borrower notifies the Non-Consenting Lender and the Agent of its intent to replace  the Non-Consenting Lender pursuant to Clause 3.5(a); and
(iv)	in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(c) For purposes of this Clause 3.5, in the event that:

(i)	the Borrower or the Agent has requested the Lenders to give a consent in relation to or to agree to a waiver or amendment of any provisions of the Finance Documents;
(ii)	the consent, waiver or amendment in question requires the approval of all Lenders; and
(iii)	Lenders whose Commitments aggregate more than 66.66% percent of the Total Commitments have consented to or agreed to such waiver or amendment,

	then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.
4	DRAWDOWN
4.1	Request for Advance. Subject to the following conditions, the Borrower may request an Advance to be made by delivering to the Agent a completed Drawdown Notice not later than 11:00 a.m. (New York time) three (3) Business Days prior to the intended Drawdown Date.
4.2	Availability. The conditions referred to in Clause 4.1 are that:
(a)	the Drawdown Date must be a Business Day during the Availability Period;

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(b)	the minimum amount of an Advance must be $1 million and shall not exceed the Total Available Commitments;
(c)	the aggregate amount of the Advances shall not exceed the Total Commitments;
(d)	not more than 10 Advances shall be outstanding at any one time; and
(e)	the applicable conditions precedent stated in Clause 9 hereof shall have been satisfied or waived as provided therein.
4.3	Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)	the amount of the Advance and the Drawdown Date;
(b)	the amount of that Lender’s participation in the Advance; and
(c)	the duration of the Interest Period.
4.4	Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorized attorney-in-fact of the Borrower and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5	Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, before 11:00 a.m. (New York City time) on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender under Clause 2.2.
4.6	Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrower shall be made:
(a)	to the account which the Borrower specifies in the Drawdown Notice; and
(b)	in the like funds as the Agent received the payments from the Lenders.
4.7	Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 to the account of a third party designated by the Borrower in a Drawdown Notice shall constitute the making of the Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.
4.8	Promissory note.
(a)	The obligation of the Borrower to pay the principal of, and interest on, the Loan shall be evidenced by the Note, which shall be dated the date of the first Drawdown Date.

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(b)	Each Advance made by the Lenders to the Borrower may be evidenced by a notation of the same made by the Agent on the grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of such Advance.
(c)	Each Lender shall record on its internal records the amount of its participation in each Advance and each payment in respect thereof, and the unpaid balance of such participation in such Advance shall, absent manifest error and to the extent not inconsistent with the notations made by the Agent on the grid attached to the Note, be as so recorded.
(d)	The failure of the Agent or any Lender to make any such notation shall not affect the obligation of the Borrower in respect of such Advance or the Loan nor affect the validity of any transfer by the Agent of the Note.
(e)	On receipt of satisfactory evidence that the Note has been lost, mutilated or destroyed and on surrender of the remnants thereof, if any, the Borrower will promptly replace the Note, without charge to the Creditor Parties, with a similar Note.  If such replacement Note replaces a lost Note it shall bear an endorsement to that effect.  Any lost Note subsequently found shall be surrendered to the Borrower and cancelled.  The Agent shall indemnify the Borrower for any losses, claims or damages resulting from the loss of such Note.
5.	INTEREST
5.1	Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.
5.2	Payment of normal interest. Subject to the provisions of this Agreement, interest on an Advance in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.
5.3	Payment of accrued interest. In the case of an Interest Period longer than three (3) months, accrued interest shall be paid every three (3) months during that Interest Period and on the last day of that Interest Period.
5.4	Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:
(a)	each rate of interest; and
(b)	the duration of each Interest Period,
	as soon as reasonably practicable after each is determined.
5.5	Intentionally omitted.
5.6	Absence of quotations by Reference Banks. If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks but if two (2) or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

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5.7	Market disruption. The following provisions of this Clause 5 apply if:
(a)	no Screen Rate is available for an Interest Period and two (2) or more of the Reference Banks do not, before 1:00 p.m. (London time) on the Quotation Date, provide quotations to the Agent in order to fix LIBOR;
(b)	at least one (1) Business Day before the start of an Interest Period, Lenders having Commitments amounting to more than 50% of the Total Commitments notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding the respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for the Interest Period; or
(c)	at least one (1) Business Day before the start of an Interest Period, the Agent is notified by a Lender that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.
5.8	Notification of market disruption. The Agent shall promptly notify the Borrower, each of the Lenders and each of the Swap Counterparties stating the circumstances falling within Clause 5.7 which have caused its notice to be given (the “Market Disruption Notification”); provided that the level of detail of the Market Disruption Notification shall be in the Agent’s sole discretion and the Market Disruption Notification itself shall, absent manifest error, be final, conclusive and binding on all parties hereto.
5.9	Intentionally omitted.
5.10	Intentionally omitted.
5.11	Intentionally omitted.
5.12	Alternative rate of interest during market disruption. For so long as the circumstances falling within Clause 5.7 are continuing, the Agent shall, on behalf of the Lenders, negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest and if no such agreement can be reached by the Borrower and the Agent prior to the expiry of the then current Interest Period, the Agent shall with the agreement of each Lender, for each one month period, set an interest rate representing the actual cost of funding of the Lenders in Dollars of their respective Contribution plus the applicable Margin. Such alternative pricing agreed upon pursuant to this Clause 5.12 shall be binding on all parties hereto. The procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of each such one month period.
5.13	Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay (without premium or penalty) the Loan at the end of the interest period set by the Agent.

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5.14	Prepayment; termination of Commitments. A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders of the Borrower’s notice of intended prepayment and:
(a)	on the date on which the Agent serves that notice, the Total Commitments shall be cancelled; and
(b)	on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin.
5.15	Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.
6	INTEREST PERIODS
6.1	Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.
6.2	Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:
(a)	3 or 6 months as notified by the Borrower to the Agent not later than 11:00 a.m. (New York time) three (3) Business Days before the commencement of the Interest Period;
(b)	in the case of the first Interest Period applicable to each Advance other than the first Advance, a period ending on the last day of the Interest Period applicable to the prior Advances then outstanding, whereupon all Advances shall be consolidated and treated as a single Advance;
(c)	3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or
(d)	such other period as the Agent may, with the authorization of the Majority Lenders, agree with the Borrower.
6.3	Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than three (3) months, any Lender notifies the Agent by 11:00 a.m. (New York time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of three (3) months.
6.4	No Interest Period to extend beyond Termination Date. No Interest Period shall end after the Termination Date and any Interest Period which would otherwise extend beyond the Termination Date shall instead end on the Termination Date.

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7	DEFAULT INTEREST
7.1	Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:
(a)	the date on which the Finance Documents provide that such amount is due for payment; or
(b)	if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
(c)	if such amount has become immediately due and payable under Clause 20.4, the date on which it became immediately due and payable.
7.2	Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.00 percent above:
(a)	in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or
(b)	in the case of any other overdue amount, the rate set out at Clause 7.3(b).
7.3	Calculation of default rate of interest. The rates referred to in Clause 7.2 are:
(a)	the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period); and
(b)	the applicable Margin plus, in respect of successive periods of any duration (including at call) up to three (3) months which the Agent may select from time to time:

(i)

LIBOR; or

(ii)

if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the actual cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

7.4

Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.

7.5

Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

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7.6	Intentionally omitted.
7.7	Application to Master Agreements. For the avoidance of doubt, this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which section 9(h) (Interest and Compensation) of that Master Agreement shall apply.
8	REPAYMENT, PREPAYMENT, REDUCTION AND CANCELLATION
8.1	Quarterly reductions of Total Commitments. The Total Commitments shall be reduced by and cancelled in equal quarterly reductions in the amount of Four Million Sixty-Seven Thousand Seven Hundred and Fifty-Five United Dollars ($4,067,755) commencing on June 30, 2011 and thereafter the last Business Day of each calendar quarter ending September 30, December 31, March 31 and June 30, and shall be reduced to zero and cancelled on the Termination Date. If the Total Commitments are reduced pursuant to any mandatory reduction under Clause 8.8 or by any voluntary cancellation under Clause 8.12, the amount of each scheduled reduction of the Total Commitments under this Clause 8.1 (including the final reduction) shall be reduced proportionately.
8.2	Repayments of the Loan. On any day on which the aggregate amount of the Loan exceeds the aggregate amount of the Total Commitments, the Borrower shall repay the Loan in an amount equal to such excess.
8.3	Termination Date. On the Termination Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.
8.4	Voluntary prepayment. Subject to the conditions set forth in Clause 8.5, the Borrower may prepay the whole or any part of any Advance or the Loan without premium or penalty.
8.5	Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:
(a)	a partial prepayment shall be $1,000,000 or a multiple of $1,000,000;
(b)	the Agent has received from the Borrower at least three (3) Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and
(c)	the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any other Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any other Security Party has been complied with (which may be satisfied by the Borrower certifying that no consents are required and that no regulations need to be complied with).

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8.6	Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorization of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.
8.7	Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).
8.8	Mandatory prepayment and Commitment reduction.
(a)	Subject to paragraphs (b) and (c) below, if a Ship is sold or becomes a Total Loss, the Total Commitments shall be reduced by the relevant proportion and the Borrower shall repay such amount, if any, as required pursuant to Clause 8.2:

(i)	in the case of a sale, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or
(ii)	in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

	For purposes of this Clause 8, “relevant proportion” means an amount equal to the Total Commitments multiplied by a fraction, the numerator of which is the Fair Market Value of the Ship that was lost or sold and the denominator of which is the aggregate Fair Market Value of all of the Ships.
(b)	Notwithstanding the requirements of paragraph (a), if a Ship is sold or becomes a Total Loss the Borrower may elect by written notice to the Agent to cause the sale proceeds or insurance proceeds (as the case may be) to be deposited in the Retention Account as Collateral for the Secured Liabilities:

(i)	in the case of a sale, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or
(ii)	in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

	Such proceeds shall be retained in the Retention Account until applied as required by either paragraph (c) or (d) below.
(c)	If within 90 days after the date on which the sale of the relevant Ship is completed or 180 days after the Total Loss Date (as the case may be) the Borrower (or a nominee of the Borrower) desires to purchase a vessel (a “Replacement Ship”) that either:

(i) meets the requirements stated in the definition of Acceptable Ship; or

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(ii) in the reasonable discretion of the Majority Lenders, is of substantially similar type, age, quality, condition and value as the Ship that was lost or sold,

	then provided no Event of Default or Potential Event of Default has occurred and is continuing and the Borrower executes and/or delivers (or causes the execution and/or delivery of) the documents required by Part B of Schedule 4, then the Agent, upon the written request of the Borrower, shall release such sale proceeds or insurance proceeds (as the case may be) from the Retention Account to the Borrower or as the Borrower may direct in connection with the acquisition of the Replacement Ship and no reduction of the Total Commitments shall be required under Clause 8.8(a).
(d)	If, however, the Borrower (or a nominee of the Borrower) does not consummate the purchase of a Replacement Ship within 90 days after the date on which the sale of the relevant Ship is completed or 180 days after the Total Loss Date (as the case may be), then the sale proceeds or insurance proceeds (as the case may be) deposited in the Retention Account shall be applied by the Agent as a repayment (if applicable) and Total Commitment reduction as required under Clause 8.8(a) and any proceeds in excess of such required repayment shall be paid promptly to the Borrower.
8.9	Release of Collateral and Collateral substitution. Upon the written request of the Borrower to the Agent, a Ship shall be released as Collateral for the Loan and, notwithstanding the requirements of Clause 8.8, a mandatory reduction of the Total Commitments shall not be required provided that:
(a)	no Event of Default or Potential Event of Default has occurred and is continuing and the Security Parties are in compliance with all of their respective covenants under the Finance Documents;
(b)	on or before the date such Ship is released, either:

(i)	a Ship meeting the requirements stated in the definition of Acceptable Ship on such date; or
(ii)	in the reasonable discretion of the Majority Lenders, a vessel that is of substantially similar type, age, quality, condition and value as the Ship that is to be released,

	is provided as substitute Collateral (a “Substitute Collateral Ship”) for the Ship that is to be released; and
(c)	the Borrower executes and/or delivers (or causes the execution and/or delivery of) the documents required by Part C of Schedule 4.
8.10	Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 22 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 22.1(b), but without premium or penalty.
8.11	Reborrowing permitted. Subject to the terms of this Agreement, any amount repaid or prepaid may be reborrowed.

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8.12	Voluntary cancellation of Total Commitments. Subject to the conditions set forth in Clause 8.13, the Borrower may cancel the whole or any part of the Total Commitments without premium or penalty.
8.13	Conditions for voluntary cancellation of Total Commitments. The conditions referred to in Clause 8.12 are that:
(a)	a partial cancellation shall be in the amount of $1,000,000 or a multiple of $1,000,000; and
(b)	the Agent has received from the Borrower at least three (3) Business Days’ prior written notice specifying the amount to be cancelled and the date on which the cancellation is to take effect; and
(c)	the Borrower has complied with Clause 8.17 on or prior to the date of such cancellation.
8.14	Effect of notice of cancellation. The service of a cancellation notice shall cause the amount of the Total Commitments specified in the notice to be permanently cancelled and any partial cancellation shall be applied against the Commitments of each Lender pro rata.
8.15	Notification of notice of cancellation. The Agent shall notify the Lenders promptly upon receiving a cancellation notice.
8.16	Application of Commitment cancellations and reductions. All voluntary cancellations and mandatory reductions of the Total Commitments shall be applied to reduce future quarterly reductions under Clause 8.1 on a pro rata basis (based on the then applicable amounts of such scheduled Commitment reductions).
8.17	Unwinding of Designated Transactions. On or prior to any reduction or cancellation of the Total Commitments under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled reductions) exceed the amount of the Total Commitments as reducing from time to time thereafter pursuant to Clause 8.1.
9	CONDITIONS PRECEDENT; EFFECT OF THIS AGREEMENT
9.1	Conditions precedent to the effectiveness of this Agreement. This Agreement shall become effective on and as of the first date (the “Effective Date”) on which the Agent receives:
(a)	the documents described in Part A of Schedule 4 in form and substance satisfactory to the Agent;
(b)	such documentation and other evidence as is reasonably requested by the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary “know your customer” or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement and the other Finance Documents, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the requirements of the USA Patriot Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”);

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(c)	the amendment fee referred to in Clause 21.1, any accrued commitment fee payable pursuant to Clause 21.1 and, if due and payable, the annual agency fee referred to in Clause 21.1 and has received payment of the expenses referred to in Clause 21.2; and
(d)	any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorization of the Majority Lenders, request by notice to the Borrower, and which the Agent finds acceptable to it.
9.2	Conditions precedent to an Advance. Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:
(a)	that, on or before the service of a Drawdown Notice, the Agent receives any accrued commitment fee due and payable pursuant to Clause 21.1 and payment of the expenses referred to in Clause 21.2; and
(b)	that both at the date of each Drawdown Notice and at each Drawdown Date:

(i)	no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance;
(ii)	the representations and warranties in Clause 10 and those of the Borrower or any Guarantor which are set out in the other Finance Documents (other than those relating to a specific date) would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing, provided that the requirements of this Clause 9.2(c)(ii) shall apply in respect of the representations and warranties in Clause 10.22 only as of the acquisition date of the relevant Ship;
(iii)	none of the circumstances contemplated by Clause 5.7 has occurred and is continuing, unless the Agent is satisfied that an alternative rate of interest can be set pursuant to Clause 5.12; and
(iv)	there has been no material change in the consolidated financial condition, operations or business prospects of the Borrower since the date on which the Borrower provided information concerning those topics to the Agent and/or any Lender;

(c)	that, if the Collateral Maintenance Ratio required by Clause 15 were applied immediately following the making of such Advance, the Borrower would not be obliged to provide additional Collateral or reduce the Total Commitments under that Clause; and
(d)	that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorization of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

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9.3	Waiver of conditions precedent. Notwithstanding anything in Clause 9.2 to the contrary, if the Agent, with the consent of the Majority Lenders, permits an Advance to be borrowed before certain of the conditions referred to in Clause 9.2 are satisfied, the Borrower shall ensure that such conditions are satisfied within ten (10) Business Days after such Drawdown Date (or such longer period as the Agent may specify).
9.4	Effect of this Agreement. Subject to the satisfaction of the conditions precedent set forth in Clause 9.1 hereof, the Borrower, the Guarantors and the Creditor Parties agree that:
(a)	the Original Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended and restated upon the terms and conditions stated herein and, as so amended and restated, the Original Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended and restated hereby;
(b)	each reference in any of the Finance Documents executed pursuant to the Original Loan Agreement to (i) “Loan Agreement”shall mean and refer to this Agreement and (ii) “term loan” shall mean and refer to “reducing revolving credit facility”, and each such Finance Document shall serve as security for the obligations of the Creditor Parties under this Agreement;
(c)	each reference in any of the Finance Documents executed pursuant to the Original Loan Agreement to “Note” shall mean and refer to the Note executed and delivered by the Borrower pursuant to Clause 9.1(a) hereof and any other Note executed and delivered by the Borrower hereafter pursuant to this Agreement;
(d)	each reference in any of the Finance Documents executed pursuant to the Original Loan Agreement to “Fortis Bank (Nederland) N.V.” shall means and refer to “ABN AMRO Bank N.V.”;
(e)	each reference in any of the Finance Documents executed pursuant to the Original Loan Agreement to “this Agreement”, “hereunder” and other like expressions shall be construed as if the same referred to such Finance Documents as amended and supplemented by this Agreement; and
(f)	except as amended hereby, all terms and conditions of each of the Finance Documents executed pursuant to the Original Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed in all respects.
10	REPRESENTATIONS AND WARRANTIES
10.1	General. Each of the Borrower and the Guarantors represents and warrants to each Creditor Party as of the Effective Date and each Drawdown Date as follows.
10.2	Status. Each Security Party is:
(a)	duly incorporated or formed and validly existing and in good standing under the law of its jurisdiction of incorporation or formation; and

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(b)	duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a material adverse effect on its business, assets or financial condition or which may affect the legality, validity, binding effect or enforceability of the Finance Documents,
	and there are no proceedings or actions pending or contemplated by any Security Party, or to the knowledge of the Borrower or the Guarantors contemplated by any third party, to dissolve, wind-up or terminate the Borrower or any other Security Party.
10.3	Company power; consents. Each Security Party has the capacity and has taken all action, and no consent of any person is required, for:
(a)	it to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted;
(b)	it to execute each Finance Document and each Master Agreement to which it is or is to become a party;
(c)	it to comply with its obligations under each Finance Document to which it is or is to become a party and the Master Agreements;
(d)	it to grant the Security Interests granted by it pursuant to the Finance Documents to which it is a party and the Master Agreements;
(e)	the perfection or maintenance of the Security Interests created by the Finance Documents (including the first priority nature thereof); and
(f)	the exercise by any Creditor Party of their rights under any of the Finance Documents or the Master Agreements or the remedies in respect of the Collateral pursuant to the Finance Documents or the Master Agreements to which it is a party,
	except, in each case, for consents which have been duly obtained, taken, given or made and are in full force and effect.
10.4	Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation.
10.5	Legal validity; effective Security Interests. Subject to any relevant insolvency laws affecting creditors’ rights generally:
(a)	the Finance Documents and the Master Agreements to which each Security Party is a party, constitute or, as the case may be, will constitute upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), such Security Party’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and

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(b)	the Finance Documents to which each Security Party is a party, creates or, as the case may be, will create upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate.
10.6	No third party Security Interests. Without limiting the generality of Clause 10.5, at the time of the execution and delivery of each Finance Document:
(a)	the relevant Security Party will have the right to create all the Security Interests which that Finance Document purports to create; and
(b)	no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.
10.7	No conflicts. The execution of each Finance Document and each Master Agreement, and the borrowing of each Advance, and compliance with each Finance Document and each Master Agreement will not involve or lead to a contravention of:
(a)	any law or regulation; or
(b)	the constitutional documents of any Security Party; or
(c)	any contractual or other obligation or restriction which is binding on any Security Party or any of its assets.
10.8	Taxes.
(a)	All payments which a Security Party is liable to make under the Finance Documents to which it is a party are permitted under applicable law to be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
(b)	The Borrower and each other Security Party has filed or has caused to be filed all tax returns and other reports that it is required by applicable law or regulation to file in any Pertinent Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in any Pertinent Jurisdiction, other than taxes and charges:

(i)	which are (A) not yet delinquent or (B) being contested in good faith by appropriate proceedings and for which adequate reserves have been established and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of a Ship; or
(ii)	the non-payment of which could not reasonably be expected to have a material adverse effect on such company.

The charges, accruals, and reserves on the books of the Borrower and each other Security Party respecting taxes are adequate in accordance with IFRS.

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(c)	No material claim for any tax has been asserted in writing against the Borrower and each other Security Party by any Pertinent Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in the most recent balance sheet of such company or disclosed in the notes thereto, if any.
(d)	The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents and the consummation of the transactions contemplated thereby will not cause any of the Creditor Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in any Pertinent Jurisdiction.
(e)	No taxes are required by any governmental authority in any Pertinent Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document.
(f)	The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be deemed to be resident, domiciled or carrying on business in any Pertinent Jurisdiction or subject to taxation under any law or regulation of any governmental authority in any Pertinent Jurisdiction.
(g)	Other than the recording of the Mortgages in accordance with the laws of an Approved Flag and such filings as may be required in a Pertinent Jurisdiction in respect of certain of the Finance Documents, and the payment of fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.
10.9	No default. No Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance.
10.10	Information. All financial statements, information and other data furnished by or on behalf of a Security Party to any of the Creditor Parties:
(a)	was true and accurate at the time it was given;
(b)	such financial statements, if any, have been prepared in accordance with IFRS and accurately and fairly represent the financial condition of such Security Party as of the date or respective dates thereof and the results of operations of such Security Party for the period or respective periods covered by such financial statements;
(c)	there are no other facts or matters the omission of which would have made or make any such information false or misleading;
(d)	there has been no material adverse change in the financial condition, operations or business prospects of any Security Party since the date on which such information was provided other than as previously disclosed to the Agent in writing; and

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(e)	none of the Security Parties has any contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate except as disclosed in such statements, information and data.
10.11	No litigation. No legal or administrative action involving a Security Party (including any action relating to any alleged or actual breach of the ISM Code, the ISPS Code or any Environmental Law) has been commenced or taken by any person, or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the business, assets or financial condition of a Security Party or which may affect the legality, validity, binding effect or enforceability of the Finance Documents.
10.12	ISM Code and ISPS Code compliance. The relevant Guarantor has obtained or will obtain or will cause to be obtained all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ship owned by it and its operation and will be or will cause such Ship and the relevant Approved Manager to be in full compliance with the ISM Code and the ISPS Code.
10.13	Intentionally omitted.
1.14	Margin Stock. The Borrower and the Guarantors are not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of the Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.
10.15	Compliance with law; Environmentally Sensitive Material. Except to the extent the following could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Borrower, or which may affect the legality, validity, binding effect or enforceability of the Finance Documents:
(a)	the operations and properties of each of the Security Parties comply with all applicable laws and regulations, including without limitation Environmental Laws, all necessary Environmental Permits have been obtained and are in effect for the operations and properties of each of the Security Parties and each of the Security Parties is in compliance in all material respects with all such Environmental Permits; and
(a)	none of the Security Parties has been notified in writing by any person that it or any of its subsidiaries or Affiliates is potentially liable for the remedial or other costs with respect to treatment, storage, disposal, release, arrangement for disposal or transportation of any Environmentally Sensitive Material, except for costs incurred in the ordinary course of business with respect to treatment, storage, disposal or transportation of such Environmentally Sensitive Material.
10.16	Ownership structure.
(a)	All of the Equity Interests of the Borrower have been validly issued, are fully paid, non-assessable.

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(b)	All of the Equity Interests of each Guarantor have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests other than Permitted Security Interests and are owned beneficially and of record by the Borrower.
(c)	None of the Equity Interests of any Guarantor are subject to any existing option, warrant, call, right, commitment or other agreement of any character to which any of the Guarantors is a party requiring, and there are no Equity Interests of any of the Guarantors outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional Equity Interests of any of the Guarantors or other Equity Interests convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests of any of the Guarantors.
10.17	Investment company, Holding company, etc. The Borrower is not:
(a)	an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended;
(b)	a “holding company” or a “subsidiary company” of a “holding company” or an affiliate of a “holding company” or of a “subsidiary company” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or
(c)	a “public utility” within the meaning of the Federal Power Act of 1920, as amended.
10.18	Asset control.
(a)	The Borrower is not a Prohibited Person, is not controlled by, or, to the best of its knowledge, acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person;
(b)	No proceeds of any Advance shall be made available, directly or, to the best of the Borrower’s knowledge, indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or, to the best of the Borrower’s knowledge, indirectly, applied in a manner or for a purpose prohibited by Sanctions.
10.19	ERISA.
(a)	None of the Security Parties is a party to any Plan or Multiemployer Plan.
(b)	The execution and delivery of this Agreement and the consummation of the transactions hereunder will not involve any “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code.
(c)	No ERISA Termination Event has occurred.
(d)	No ERISA Funding Event exists or has occurred.

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10.20	No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of an Advance, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that:
(a)	it is acting for its own account;
(b)	it will use the proceeds of each Advance for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and
(c)	the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and United States Bank Secrecy Act of 1970, as amended (the “Bank Secrecy Act”).
10.21	Ships. As of the acquisition date in respect of each Ship, such Ship will be:
(a)	in the sole and absolute ownership of a Guarantor and duly registered in such Guarantor’s name, unencumbered save and except for the Mortgage thereon in favor of the Security Trustee recorded against it and as permitted thereby;
(b)	seaworthy for hull and machinery insurance warranty purposes and in every way fit for its intended service;
(c)	insured in accordance with the provisions of this Agreement and the requirements hereof in respect of such Insurances will have been complied with;
(d)	in class (as evidenced by a Confirmation of Class Certificate) in accordance with the provisions of this Agreement and the requirements hereof in respect of such classification will have been complied with; and
(e)	managed by an Approved Manager pursuant to an Approved Management Agreement.
10.22	Place of Business. For purposes of the UCC, each Security Party has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:

9, Boulevard Charles III

Monaco 98000

None of the Security Parties has a place of business in the United States of America, the District of Columbia, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America, other than its representative office at:

150 East 58^th Street
New York, New York 10155

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10.23	Solvency. In the case of the Borrower and each of the Guarantors:
(a)	the sum of its assets, at a fair valuation, does and will exceed its liabilities (including guarantees), including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities;
(b)	the present fair market saleable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities, as they mature;
(c)	it does not and will not have unreasonably small working capital with which to continue its business; and
(d)	it has not incurred, does not intend to incur and does not believe it will incur, debts beyond its ability to pay such debts as they mature.
10.24	Borrower’s business; Guarantors’ business. From the date of its incorporation until the date hereof, neither the Borrower nor any of the Guarantors has conducted any business other than in connection with, or for the purpose of, owning, chartering and operating the Ships.
11	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS
11.1	Affirmative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.1 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld:
(a)	Performance of obligations. Each Security Party shall duly observe and perform its obligations under each Charter and each Finance Document to which it is or is to become a party.
(b)	Notification of defaults (etc). The Borrower shall promptly notify the Agent, upon becoming aware of the same, of:

(i)	the occurrence of an Event of Default or of any Potential Event of Default or any other event (including any litigation) which is reasonably likely to materially adversely affect any Security Party’s ability to perform its obligations under each Charter and each Finance Document to which it is or is to become a party;
(ii)	any default by any party to a Charter; and
(iii)	any damage or injury caused by or to a Ship in excess of $5,000,000.

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(c) Confirmation of no default. The Borrower will, within two (2) Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of the Borrower and which states that:

(i)	no Event of Default or Potential Event of Default has occurred; or
(ii)	no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

	The Agent may serve requests under this Clause 11.1(c) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 33% of the Loan or (if no Advances are outstanding) Commitments exceeding 33% of the Total Commitments, and this Clause 11.1(c) does not affect the Borrower’s obligations under Clause 11.1(b).
(d)	Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any other Security Party, any Approved Manager or any Ship, its Earnings or Insurances as soon as such action is instituted, unless it is likely that the legal or administrative action cannot be considered material in the context of any Finance Document.
(e)	Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(i)	the Borrower and, its subsidiaries; or
(ii)	any other matter relevant to, or to any provision of, a Finance Document,

	which may be requested by the Agent.
(f)	Books of record and account. Each Security Party shall keep proper books of record and account, in which full and materially correct entries shall be made of all financial transactions and the assets and business of such Security Party in accordance with IFRS, and the Agent shall have the right to examine such books and records wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done without undue interference with the day to day business of such Security Party.
(g)	Financial reports. Whether or not the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, the Borrower will furnish to the Agent:

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(i)	within 75 days after the end of each of the first three fiscal quarters in each Fiscal Year, quarterly reports on Form 6-K (or any successor form) containing unaudited financial statements (including a balance sheet and statement of income, changes in stockholders’ equity and cash flow) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding Fiscal Year);
(ii)	within 120 days after the end of each Fiscal Year, an annual report on Form 20-F (or any successor form) containing the information required to be contained therein for such Fiscal Year;
(iii)	at or prior to such times as would be required to be filed or furnished to the SEC if the Borrower were then a “foreign private issuer” subject to Sections 13(a) or 15(d) of the Exchange Act, all such other reports and information that the Borrower would have been required pursuant thereto;
(iv)	together with the financial statements that the Borrower delivers in (i) and (ii) above, a Compliance Certificate;
(v)	no later than January 31 of each Fiscal Year of the Borrower, a copy of its one (1) year forecast and projection, certified to be true and complete by the chief financial officer of the Borrower; and
(vi)	such other financial statements, annual budgets and projections as may be reasonably requested by the Agent,
provided that to the extent that the Borrower ceases to qualify as a “foreign private issuer” within the meaning of the Exchange Act, whether or not the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, the Borrower will furnish to the Agent all reports and other information that it would be required to file with (or furnish to) the Commission pursuant Sections 13(a) or 15(d) of the Exchange Act if it were required to file such documents under the Exchange Act as follows:

(A)	if the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, within 30 days of the respective dates on which the Borrower is required to file such documents pursuant to the Exchange Act; or
(B)	if the Borrower is not then subject to Sections 13(a) or 15(d) under the Exchange Act, the applicable time periods described above with respect to quarterly, annual and other reports and information.

	Notwithstanding the foregoing, the Borrower will be deemed to have furnished to the Agent such reports and information referred to above if the Borrower has filed such reports and information with the Commission via the EDGAR system (or any successor system) and such reports and information are publicly available.
(h)	Appraisals of Fair Market Value. The Borrower shall procure and deliver to the Agent two written appraisal reports setting forth the Fair Market Value of each Ship as follows:

(i)	at the Borrower’s expense, for inclusion with each Compliance Certificate required to be delivered together with the second quarterly and the annual financial statements that the Borrower delivers under Clause 11.1(g)(i) and (ii); and
(ii)	at the Lenders’ expense, at all other times upon the request of the Agent or the Majority Lenders, unless an Event of Default has occurred and is continuing, in which case the Borrower shall procure it at its expense as often as requested;

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	provided that if there is a difference of or in excess of 10% between the two valuations obtained by the Borrower, the Borrower may, at its sole expense, obtain a third appraisal from an Approved Broker.
(i)	Taxes. Each Security Party shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a Security Interest upon the Collateral or any part thereof, except in each case, for any such taxes (i) as are being contested in good faith by appropriate proceedings or (ii) the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of the Borrower or any other Security Party or to affect the legality, validity, binding effect or enforceability of the Finance Documents.
(j)	Consents. Each Security Party shall obtain or cause to be obtained, maintain in full force and effect and comply with the conditions and restrictions (if any) imposed in connection with, every consent and do all other acts and things which may from time to time be necessary or required for the continued due performance of all of its obligations under any Charter and each Finance Document to which it is or is to become a party, and shall deliver a copy of all such consents to the Agent promptly upon its request.
(k)	Compliance with applicable law. Each Security Party shall comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation, all Environmental Laws and regulations relating to thereto, the failure to comply with which would be likely to have a material adverse effect on the financial condition of the Borrower or affect the legality, validity, binding effect or enforceability of any Charter and each Finance Document to which it is or is to become a party.
(l)	Existence. Each Security Party shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence in good standing under the laws of the jurisdiction of incorporation or formation.
(m)	Borrower’s business. The Borrower shall conduct business only in connection with, or for the purpose of, owning, managing, chartering and operating the Ships.
(n)	Properties. Except to the extent the failure to do so could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Security Parties or which may affect the legality, validity, binding effect or enforceability of the Finance Documents, each Security Party shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
(o)	Loan proceeds. The Borrower shall use the proceeds of each Advance solely (i) to refinance the current amounts outstanding under the Original Loan Agreement and/or (ii) for general corporate purposes.
(p)	Change of place of business. The Borrower shall notify promptly the Agent of any change in the location of the place of business where it or any other Security Party conducts its affairs and keeps its records.

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(q)	Pollution liability. Each Security Party shall take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of pollution incidents or as may be reasonably required to protect the interests of the Creditor Parties with respect thereto.
(r)	Subordination of loans. Each Security Party shall cause all loans made to it by any Affiliate or subsidiary and all sums and other obligations (financial or otherwise) owed by it to any Affiliate or subsidiary to be fully subordinated to all Secured Liabilities.
(s)	Money laundering. The Borrower shall to the best of its knowledge and ability comply, and cause each of its subsidiaries to comply, with any applicable law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act.
(t)	Asset control. The Borrower shall to the best of its knowledge and ability ensure that:

(i)	it is not owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person; and
(ii)	no proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

(u) ERISA. Promptly upon:

(i)	the occurrence of any ERISA Termination Event;
(ii)	the occurrence or existence of any ERISA Funding Event; or
(iii)	the occurrence with respect to a Plan of a Reportable Event,

	the Borrower shall furnish or cause to be furnished to the Agent, with copies for each of the Lenders, written notice thereof and the action, if any, which the Borrower has taken and proposes to take with respect thereto.
(v)	Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of any Security Party under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.
(w)	Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are dispatched, copies of all communications which are dispatched to the Borrower’s shareholders or creditors or any class of them.
(x)	Maintenance of Security Interests. The Borrower will:

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(i)

at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(ii)

without limiting the generality of paragraph (i), at its own cost, promptly register, file, record or enroll any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

(y) “Know your customer” checks. If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of the Borrower or any other Security Party after the date of this Agreement; or
(iii)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

	obliges the Agent or any Lender (or, in the case of paragraph (iii), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (iii), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(z)	Charter Assignment. Each Guarantor who enters into a Charter for its Ship shall execute and deliver a Charter Assignment provided that a Charter Assignment shall not be required under this Agreement unless the Borrower, using reasonable commercial efforts, is able to obtain the consent of the charterer named in the relevant Charter to such Charter Assignment.
(aa)	Further assurances. From time to time, at its expense, the Borrower and each of the Guarantors shall duly execute and deliver to the Agent such further documents and assurances as the Majority Lenders or the Agent may request to effectuate the purposes of this Agreement, the other Finance Documents or obtain the full benefit of any of the Collateral.
11.2	Negative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.2 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld:

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(a)	Security Interests. Each Guarantor will not create, assume or permit to exist any Security Interest whatsoever upon any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Security Interests.
(b)	Sale of assets. Each Security Party shall not sell, transfer or lease (other than in connection with a Charter) all or substantially all of its properties and assets, or enter into any transaction of merger or consolidation or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution), provided that any Guarantor may sell its respective Ship pursuant to the terms of this Agreement.
(c)	Affiliate transactions. No Security Party will enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate or subsidiary, other than on terms and conditions substantially as favorable to such person as would be obtainable by such person at the time in a comparable arm’s-length transaction with a person other than an Affiliate or subsidiary.
(d)	Change of business. The Borrower will not change the nature of its business or commence any business otherwise than in connection with, or for the purpose of, operating the Ships.
(e)	Change of Control; Negative pledge.

(i)	The Borrower will not permit any act, event or circumstance that would result in a Change of Control or would result in the Borrower owning directly or indirectly less than 100% of the issued and outstanding Equity Interests in each Guarantor.
(ii)	The Borrower will not permit any pledge or assignment of any Guarantor’s Equity Interests except in favor of the Security Trustee to secure the Secured Liabilities.

(f)	Increases in capital. None of the Guarantors will increase its capital by way of the issuance of any class or series of preferred securities or common or ordinary securities, or otherwise howsoever, or create any new class of equity, that is not subject to a Security Interest to secure the Secured Liabilities.
(g)	Financial Indebtedness. No Guarantor will incur any Financial Indebtedness other than the Loan and the Swap Exposure.
(h)	Dividends. The Borrower may not pay dividends if an Event of Default has occurred and is continuing or would result therefrom. None of the Guarantors will create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Guarantor to (i) pay dividends or make any other distributions on its capital stock to the Borrower or pay any Financial Indebtedness owed to the Borrower, (ii) make any loans or advances to the Borrower or (iii) transfer any of its property or assets to the Borrower.

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(i)	Intentionally omitted.
(j)	Intentionally omitted.
(k)	Loans and investments. The Guarantors shall not make any loan or advance to, make any investment in, or enter into any working capital maintenance or similar agreement with respect to any person, whether by acquisition of Equity Interests or indebtedness, by loan, guarantee or otherwise.
(l)	Acquisition of capital assets. The Guarantors shall not acquire any capital assets (including any vessel other than a Ship) by purchase, charter or otherwise, provided that for the avoidance of doubt nothing in this Clause 11.2(l) shall prevent or be deemed to prevent capital improvements being made to a Ship.
(m)	Sale and leaseback. No Guarantor shall enter into any arrangements, directly or indirectly, with any person whereby it shall sell or transfer any of its property, whether real or personal, whether now owned or hereafter acquired, if it, at the time of such sale or disposition, intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.
(n)	Changes to Fiscal Year and accounting policies. The Borrower shall not change its Fiscal Year or make or permit any change in accounting policies affecting (i) the presentation of financial statements or (ii) reporting practices, except in either case in accordance with IFRS or pursuant to the requirements of applicable laws or regulations.
(o)	Jurisdiction of incorporation or formation; Amendment of constitutional documents. Neither the Borrower nor any of the Guarantors shall change the jurisdiction of its incorporation or formation. None of the Guarantors shall amend its constitutional documents. The Borrower shall not amend its constitutional documents in any manner that would adversely affect its obligations under this Agreement or any other Finance Document to which it is a party.
(p)	Sale of Ship. Except as otherwise provided in Clause 8.8 or 8.9, no Security Party will consummate the sale of its Ship without paying or causing to be paid all amounts due and owing under this Agreement and the other Finance Documents prior to or simultaneously with the consummation of such sale.
(q)	Change of location. No Security Party shall change the location of its chief executive office or the office where its corporate records are kept or open any new office for the conduct of its business on less than thirty (30) days prior written notice to the Agent.
(r)	Money laundering. The Borrower shall not contravene any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council and comparable United States federal and state laws, including without limitation the Bank Secrecy Act and the PATRIOT Act.

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12	FINANCIAL COVENANTS
12.1	General. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 12 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
12.2	Maximum leverage. The Borrower shall maintain a ratio of Net Debt to Consolidated Total Capitalization of not more than 0.60 to 1.00, to be tested on the last day of each fiscal quarter.
12.3	Minimum tangible net worth. The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $150,000,000 plus (a) 25% of the Borrower’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after July 1, 2010 and (b) 50% of the value of the Equity Proceeds realized from any issuance of Equity Interests in the Borrower occurring on or after July 1, 2010.
12.4	Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing quarter basis from and including the third fiscal quarter of 2011, provided that for the third fiscal quarter of 2012 and all periods thereafter such ratio shall be calculated on a trailing four quarter basis.
12.5	Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels.
13	MARINE INSURANCE COVENANTS
13.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 13 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
13.2	Maintenance of obligatory insurances. Each Security Party shall keep the Ship owned by it insured at the expense of that Security Party against:
(a)	fire and usual marine risks (including hull and machinery and excess risks);
(b)	war risks;

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(c)	protection and indemnity risks; and
(d)	any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Security Party to insure and which are specified by the Security Trustee by notice to the Borrower.
13.3	Terms of obligatory insurances. The relevant Security Party shall effect such insurances in respect of the Ship owned by it:
(a)	in Dollars;
(b)	in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:

(i)	when aggregated with the insured values of the other Ships then financed under this Agreement, 120% of the aggregate of the Loan and the Swap Exposure of each Swap Counterparty; and
(ii)	the Fair Market Value of the Ship owned by it;

	provided that not less than 80% of the insured value established pursuant to (i) or (ii) above shall be on a hull and machinery basis.
(c)	in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;
(d)	in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;
(e)	on approved terms; and
(f)	through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.
13.4	Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, each Security Party shall procure that the obligatory insurances effected by it shall:
(a)	subject always to paragraph (b), name the relevant Security Party as the sole named assured unless the interest of every other named assured is limited:

(i) in respect of any obligatory insurances for hull and machinery and war risks;

(A) to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and

(B) to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

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(ii) in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

	and every other named assured has undertaken in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between the relevant Security Party and every other named assured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b)	whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lenders, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c)	name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)	provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;
(e)	provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party; and
(f)	provide that the Security Trustee may make proof of loss if the Borrower fails to do so.
13.5	Renewal of obligatory insurances. The Borrower shall:
(a)	at least 14 days before the expiry of any obligatory insurance:

(i)	notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower or the relevant Security Party proposes to renew that obligatory insurance and of the proposed terms of renewal; and
(ii)	obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b) at least 7 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

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(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.
13.6	Copies of policies; letters of undertaking. The relevant Security Party shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:
(a)	they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;
(b)	they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;
(c)	they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;
(d)	they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Security Party or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and
(e)	they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Security Party under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.
13.7	Copies of certificates of entry. The relevant Security Party shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:
(a)	a certified copy of the certificate of entry for that Ship;
(b)	a letter or letters of undertaking in such form as may be required by the Security Trustee;
(c)	where required to be issued under the terms of insurance/indemnity provided by the protection and indemnity association, but only if and when so requested by the Agent, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the relevant Security Party in relation to that Ship in accordance with the requirements of such protection and indemnity association; and

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(d)	a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.
13.8	Deposit of original policies. The relevant Security Party shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.
13.9	Payment of premiums. The relevant Security Party shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.
13.10	Guarantees. The relevant Security Party shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
13.11	Compliance with terms of insurances. The relevant Security Party shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:
(a)	the relevant Security Party shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;
(b)	the relevant Security Party shall not make any changes relating to the classification or the Classification Society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;
(c)	the relevant Security Party shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America’s Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
(d)	the relevant Security Party shall not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
13.12	Alteration to terms of insurances. The relevant Security Party shall neither make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.
13.13	Settlement of claims. The relevant Security Party shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

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13.14	Provision of copies of communications. The relevant Security Party shall provide the Security Trustee, at the time of each such communication, copies of all written communications between such Security Party and:
(a)	the approved brokers;
(b)	the approved protection and indemnity and/or war risks associations; and
(c)	the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i)	such Security Party’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)	any credit arrangements made between such Security Party and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.15	Provision of information. In addition, the relevant Security Party shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:
(a)	obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
(b)	effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;
	and such Security Party shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).
13.16	Mortgagee’s interest, additional perils and political risk insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance, a mortgagee’s political risks insurance and a mortgagee’s interest marine insurance in such amounts (not to exceed 120% of the Loan), on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the relevant Security Party shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.
13.17	Review of insurance requirements. The Security Trustee may and, on instruction of the Majority Lenders, shall review, at the expense of the Borrower, the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent or the Majority Lenders significant and capable of affecting the relevant Security Party or a Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the relevant Security Party may be subject.)

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13.18	Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Security Trustee may or, on instruction of the Majority Lenders, shall reasonably consider appropriate in the circumstances and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Security Parties accordingly.
13.1	Compliance with instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the relevant Security Party implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.
14	SHIP COVENANTS
14.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 14 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
14.2	Ship’s name and registration. Each Security Party shall keep the Ship owned by it registered in its name under the law of the Approved Flag on which such Ship was registered when it became subject to a Mortgage; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperiled; and shall not change the name or port of registry of the Ship.
14.3	Repair and classification. Each Security Party shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)	consistent with first-class ship ownership and management practice;
(b)	so as to maintain the highest class for such Ship with the Classification Society, free of overdue recommendations and conditions affecting that Ship’s class; and
(c)	so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which such Ship was registered when it became subject to a Mortgage or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.
14.4	Classification Society instructions. The relevant Security Party shall instruct the Classification Society referred to in Clause 14.3(b):

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(a)	to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Classification Society in relation to the Ship owned by that Security Party;
(b)	to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Security Party and that Ship at the offices of the Classification Society and to take copies of them;
(c)	to notify the Security Trustee immediately in writing if the Classification Society:

(i)	receives notification from that Security Party or any other person that that Ship’s Classification Society is to be changed; or
(ii)	becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Security Party’s or that Ship’s membership of the Classification Society;

(d) following receipt of a written request from the Security Trustee:

(i)	to confirm that that Security Party is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or
(ii)	if that Security Party is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society.

14.5	Modification. The relevant Security Party shall not make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on that Ship which would or is reasonably likely to materially reduce its value.
14.6	Removal of parts. The relevant Security Party shall not remove any material part of the Ship owned by it, or any item of equipment owned by it installed on, that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favor of any person other than the Security Trustee and becomes on installation on that Ship the property of that Security Party and subject to the security constituted by the Mortgage (and Deed of Covenant where applicable), provided that the relevant Security Party may install and remove equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.
14.7	Surveys. The relevant Security Party shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee, provide the Security Trustee with copies of all survey reports.

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14.8	Inspection. The relevant Security Party shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. The Security Trustee shall use reasonable endeavors to ensure that the operation of the Ship is not adversely affected as a result of such inspections.
14.9	Prevention of and release from arrest. The relevant Security Party shall promptly discharge:
(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, or its Earnings or Insurances;
(b)	all taxes, dues and other amounts charged in respect of the Ship owned by it, or its Earnings or Insurances; and
(c)	all other outgoings whatsoever in respect of the Ship owned by it, or its Earnings or Insurances,
	and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Security Party shall procure its release by providing bail or otherwise as the circumstances may require.
14.10	Compliance with laws etc. Each Guarantor shall:
(a)	comply, or procure compliance with, all laws or regulations, the non-compliance with which could reasonably be expected to have a material adverse effect on the Borrower’s business, assets or financial condition:

(i)	relating to its business generally; or
(ii)	relating to the ownership, employment, operation and management of the Ship owned by it,

	including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions;
(b)	without prejudice to the generality of paragraph (a) above, not employ the Ship owned by it nor allow its employment in any manner contrary to any laws or regulations, including but not limited to the ISM Code, the ISPS Code; all Environmental Laws and all Sanctions; and
(c)	in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and that Guarantor has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
14.11	Provision of information. The relevant Security Party shall promptly provide the Security Trustee with any information which it requests regarding:

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(a)	the Ship owned by it, its employment, position and engagements;
(b)	that Ship’s Earnings and payments and amounts due to that Ship’s master and crew;
(c)	any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;
(d)	any towages and salvages; and
(e)	the relevant Security Party’s, the relevant Approved Manager’s or that Ship’s compliance with the ISM Code and the ISPS Code,
	and, upon the Security Trustee’s request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of the relevant Security Party’s or the relevant Approved Manager’s Document of Compliance.
14.12	Notification of certain events. The relevant Security Party shall immediately notify the Security Trustee by fax or email, confirmed forthwith by letter, of:
(a)	any casualty which is or is likely to be or to become a Major Casualty;
(b)	any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)	any requirement or condition made by any insurer or the Classification Society or by any competent authority which is not immediately complied with;
(d)	any arrest or detention of the Ship owned by it, any exercise or purported exercise of any Security Interest on that Ship or its Earnings or any requisition of that Ship for hire;
(e)	any intended dry docking of the Ship owned by it;
(f)	any Environmental Claim made against the relevant Security Party or in connection with the Ship owned by it, or any Environmental Incident;
(g)	any claim for breach of the ISM Code or the ISPS Code being made against the relevant Security Party, the relevant Approved Manager or otherwise in connection with the Ship owned by it; or
(h)	any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;
	and the relevant Security Party shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the relevant Security Party’s, the relevant Approved Manager’s or any other person’s response to any of those events or matters.
14.13	Restrictions on chartering, appointment of managers etc. The relevant Security Party shall not:

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(a)	let the Ship owned by it on demise charter for any period;
(b)	enter into any charter in relation to the Ship owned by it under which more than two (2) months’ hire (or the equivalent) is payable in advance;
(c)	charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;
(d)	appoint a manager of the Ship owned by it other than an Approved Manager or agree to any material alteration to the terms of the Approved Management Agreement; or
(e)	put the Ship owned by it into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any Security Interest on that Ship or the Earnings for the cost of such work or for any other reason.
14.14	Notice of Mortgage. The relevant Security Party shall keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board that Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that such Ship is mortgaged by that Security Party to the Security Trustee.
14.15	Intentionally Omitted.
14.16	ISPS Code. The relevant Security Party shall comply with the ISPS Code and in particular, without limitation, shall:
(a)	procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and
(b)	maintain for the Ship an ISSC; and
(c)	notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
15	COLLATERAL MAINTENANCE RATIO
15.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 15 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
15.2	Collateral Maintenance Ratio. If, at any time, the Agent notifies the Borrower that:
(a)	the aggregate Fair Market Value of the Ships; plus
(b)	the net realizable value of any additional Collateral previously provided under this Clause 15,is below 150 percent of the Loan (such ratio being the “Collateral Maintenance Ratio”), the Agent (acting upon the instruction of the Majority Lenders) shall have the right to require the Borrower to comply with the requirements of Clause 15.3.

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15.3	Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.2, the Borrower shall, within one (1) month after the date on which the Agent’s notice is served, either:
(a)	provide, or ensure that a third party provides, additional Collateral which, in the opinion of the Majority Lenders, has a net realizable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorization of the Majority Lenders, approve or require; or
(b)	prepay the Loan in such amount as will eliminate the shortfall.
15.4	Value of additional vessel security. The net realizable value of any additional Collateral which is provided under Clause 15.3 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the definition of Fair Market Value.
15.5	Valuations binding. Any valuation under Clause 15.3 or 15.4 shall be binding and conclusive as regards the Borrower and the Lenders, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Ship.
15.6	Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker or other expert acting under Clause 15.4 with any information which the Agent or the Approved Broker or other expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.
15.7	Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 21.2, 21.3 and 22.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or other expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.
15.8	Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.3(b).
16	GUARANTEE
16.1	Guarantee and indemnity. In order to induce the Lenders to make the Loan to the Borrower, and to induce the Swap Banks to enter into Designated Transactions with the Borrower, each Guarantor irrevocably and unconditionally jointly and severally:
(a)	guarantees, as a primary obligor and not as merely as a surety, to each Creditor Party, the punctual payment and performance by the Borrower when due, whether at stated maturity, by acceleration or otherwise, of all Secured Liabilities of the Borrower, whether for principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Obligations”);

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(b)	undertakes with each Creditor Party that whenever the Borrower does not pay any amount when due under or in connection with any of the Borrower’s Secured Liabilities, such Guarantor shall immediately on demand pay that amount as if it were the primary obligor; and
(c)	indemnifies each Creditor Party immediately on demand against any cost, loss or liability suffered or incurred by that Creditor Party (i) if any Guaranteed Obligation is or becomes unenforceable, invalid or illegal or (ii) by operation of law as a consequence of the transactions contemplated by the Finance Documents and the Master Agreements.  The amount of the cost, loss or liability shall be equal to the amount which that Creditor Party would otherwise have been entitled to recover.
16.2	Continuing guarantee. This guarantee:
(a)	is a continuing guarantee;
(b)	constitutes a guarantee of punctual performance and payment and not merely of collection;
(c)	is joint and several with any other guarantee given in respect of the Guaranteed Obligations and shall not in any way be prejudiced by any other guarantee or security now or subsequently held by any Creditor Party in respect of the Guaranteed Obligations;
(d)	shall remain in full force and effect until the later of the termination of the Total Commitments and the payment and performance in full of the Guaranteed Obligations and all other amounts payable hereunder regardless of any intermediate payment or discharge in whole or in part; and
(e)	shall be binding upon each Guarantor, its successors and permitted assigns.
16.3	Performance of Guaranteed Obligations; obligations pari passu.
(a)	Each Guarantor agrees that the Guaranteed Obligations will be performed and paid strictly in accordance with the terms of the relevant Finance Document or Master Agreement regardless of any law or regulation or order of any court:

(i)	affecting (A) any term of such Finance Document or Master Agreement or the rights of any of the Creditor Parties with respect thereto or (B) the Borrower’s ability or obligation to make or render, or right of any Creditor Party to receive, any payments or performance due thereunder; or
(ii)	which might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower.

(b) The obligations of each Guarantor under this guarantee shall rank pari passu with all other unsecured obligations of such Guarantor.

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16.4	Reinstatement. If any payment of any of the Guaranteed Obligations is rescinded, discharged, avoided or reduced or must otherwise be returned by a Creditor Party or any other person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Security Party or otherwise:
(a)	this guarantee shall continue to be effective or be reinstated, and the liability of each Guarantor hereunder shall continue or be reinstated, as the case may be, as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Creditor Party shall be entitled to recover the value or amount of that payment from each Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.
16.5	Liability absolute and unconditional. The obligations of each Guarantor under this Clause 16 shall be irrevocable, absolute and unconditional and shall not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 16, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:
(a)	any time, waiver or consent granted to, or composition with, any Security Party or other person;
(b)	the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;
(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;
(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure or status of a Security Party or any other person (including without limitation any change in the holding of such Security Party’s or other person’s Equity Interests);
(e)	any amendment to or replacement of a Finance Document, a Master Agreement or any other document or security;
(f)	any unenforceability, illegality or invalidity of any obligation of any Security Party or any other person under any Finance Document, any Master Agreement or any other document or security;
(g)	any bankruptcy, insolvency or similar proceedings; or
(h)	any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Security Party.

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16.6	Waiver of promptness, etc. Each of the Guarantors hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security Interest or any property subject thereto or exhaust any right or take any action against any Security Party or any other person or entity or any Collateral.
16.7	Waiver of revocation, etc. Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this guarantee.
16.8	Waiver of certain defenses. Each Guarantor hereby unconditionally and irrevocably waives:
(a)	any defense arising by reason of any claim or defense based upon an election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against the Borrower, any of the other Security Parties, any other guarantor or any other person or entity or any Collateral; and
(b)	any defense based on any right of set-off or counterclaim against or in respect of the obligations of such Guarantor hereunder.
16.9	Waiver of disclosure, etc. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Creditor Party to disclose to the Guarantors any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower, any other Security Party or any of their respective subsidiaries now or hereafter known by any Creditor Party.
16.10	Immediate recourse. Each Guarantor waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 16. This waiver applies irrespective of any law or any provision of a Finance Document or Master Agreement to the contrary.
16.11	Acknowledgment of benefits. Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and that the waivers set forth in this Clause 16 are knowingly made in contemplation of such benefits.
16.12	Independent obligations. The obligations of each Guarantor under or in respect of this guarantee are independent of the Guaranteed Obligations or any other obligations of the Borrower or any other Security Party under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this guarantee irrespective of whether any action is brought against the Borrower or any other Security Party or whether the Borrower or any other Security Party is joined in any such action or actions.

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16.13	Deferral of Guarantors’ rights. Until the Guaranteed Obligations have been irrevocably paid and performed in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
(a)	to be indemnified by another Security Party;
(b)	to claim any contribution from any other guarantor of any Security Party’s obligations under the Finance Documents; and/or
(c)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents, the Master Agreements or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents or the Master Agreements by any Creditor Party.
16.14	Limitation of liability. Each of the Guarantors and the Creditor Parties hereby confirms that it is its intention that the Guaranteed Obligations not constitute a fraudulent transfer or conveyance for purposes of the United States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, each of the Guarantors and the Creditor Parties hereby irrevocably agrees that the Guaranteed Obligations guaranteed by each Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
16.15	Reliance of Creditor Parties. Each of the Creditor Parties has entered into this Agreement in reliance upon, among other things, this guarantee.
17	PAYMENTS AND CALCULATIONS
17.1	Currency and method of payments. All payments to be made by the Lenders or by the Security Parties under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:
(a)	by not later than 11:00 a.m. (New York City time) on the due date;
(b)	in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);
(c)	in the case of an amount payable by a Lender to the Agent or by a Security Party to the Agent or any Lender, to Account No. 300030007278532 maintained at Nordea Bank Finland PLC, New York Branch, located at 437 Madison Avenue, New York, New York 10022, USA, ABA Number: 026010786, SWIFT: NDEAUS3NXXX, Attention: Credit Administration, re: Scorpio Tankers, or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

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(d)	in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.
17.2	Payment on non-Business Day. If any payment by a Security Party under a Finance Document would otherwise fall due on a day which is not a Business Day:
(a)	the due date shall be extended to the next succeeding Business Day; or
(b)	if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;
	and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
17.3	Basis for calculation of periodic payments. All interest, commitment fees and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
17.4	Distribution of payments to Creditor Parties. Subject to Clauses 17.5, 17.6 and 17.7:
(a)	any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, a Swap Counterparty or the Security Trustee shall be made available by the Agent to that Lender, that Swap Counterparty or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender and the Swap Counterparty or the Security Trustee may have notified to the Agent not less than five (5) Business Days previously; and
(b)	amounts to be applied in satisfying amounts of a particular category which are due to the Lenders and/or the Swap Counterparties generally shall be distributed by the Agent to each Lender and each Swap Counterparty pro rata to the amount in that category which is due to it.
17.5	Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or a Swap Counterparty, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Counterparty under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Counterparty to pay on demand.
17.6	Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or that Swap Counterparty until the Agent has satisfied itself that it has received that sum.

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17.7	Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender or a Swap Counterparty, without first having received that sum, the Borrower or (as the case may be) the Lender or the Swap Counterparty concerned shall, on demand:
(a)	refund the sum in full to the Agent; and
(b)	pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.
17.8	Agent may assume receipt. Clause 17.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.
17.9	Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any other Security Party.
17.10	Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any other Security Party.
17.11	Accounts prima facie evidence. If any accounts maintained under Clauses 17.9 and 17.10 show an amount to be owing by the Borrower or any other Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.
18	APPLICATION OF RECEIPTS
18.1	Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:
(a)	FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:

(i)

first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii), (iii), (iv) and (v) (including, but without limitation, all amounts payable by the Borrower under Clauses 21, 22 and 23 of this Agreement or by the Borrower or any other Security Party under any corresponding or similar provision in any other Finance Document);

(ii)

second, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents;

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(iii)	third, in or towards satisfaction pro rata of any and all amounts of principal payable to the Lenders under this Agreement;
(iv)	fourth, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to each Swap Counterparty (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 9(h) (Interest and Compensation) of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 18); and
(v)	fifth, in or towards satisfaction of the Swap Exposure of each Swap Counterparty (calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b)	SECOND: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement but which the Agent, by notice to the Borrower, the other Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 18.1(a); and
(c)	THIRD: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.
18.2	Variation of order of application. The Agent may, with the authorization of the Majority Lenders and the Swap Counterparties, by notice to the Borrower, the other Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 18.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.
18.3	Notice of variation of order of application. The Agent may give notices under Clause 18.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
18.4	Appropriation rights overridden. This Clause 18 and any notice which the Agent gives under Clause 18.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any other Security Party.
18.5	Payments in excess of Contribution.
(a)	If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, counterclaim or otherwise) in excess of its Contribution, such Lender shall forthwith purchase from the other Lenders such participation in their respective Contributions as shall be necessary to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.

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(b)	The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Clause 18.5 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
(c)	Notwithstanding paragraphs (a) and (b) of this Clause 18.5, any Lender which shall have commenced or joined (as a plaintiff) in an action or proceeding in any court to recover sums due to it under any Finance Document and pursuant to a judgment obtained therein or a settlement or compromise of that action or proceeding shall have received any amount, such Lender shall not be required to share any proportion of that amount with a Lender which has the legal right to, but does not, join such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in the same or another court.
(d)	Each Lender exercising or contemplating exercising any rights giving rise to a receipt or receiving any payment of the type referred to in this Clause 18.5 or instituting legal proceedings to recover sums owing to it under this Agreement shall, as soon as reasonably practicable thereafter, give notice thereof to the Agent who shall give notice to the other Lenders.
19	APPLICATION OF EARNINGS, SALE PROCEEDS AND INSURANCE PROCEEDS
19.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 19 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
19.2	Payment of Earnings, sale proceeds and insurance proceeds. The Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to ensure that:
(a)	subject only to the provisions of any Charter Assignment or Earnings Assignment, all of the Earnings of each Ship are paid to the Earnings Account for such Ship; and
(b)	if following the sale or Total Loss of a Ship the Borrower elects to proceed under Clause 8.8(b), all sale proceeds and insurance proceeds are paid to the Retention Account.
19.3	Intentionally omitted.
19.4	Intentionally omitted.
19.5	Application of funds in Retention Account. Until an Event of Default or a Potential Event of Default occurs, the Agent shall apply any funds in the Retention Account as required by:

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(a)	Clause 8.8(c) in the event a Replacement Ship is purchased within the time period permitted by such clause; or
(b)	Clause 8.8(d) in the event a Replacement Ship is not purchased pursuant to Clause 8.8(c).
19.6	Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Retention Account.
19.7	No release of accrued interest. Interest accruing under Clause 19.6 shall be credited to the Retention Account but shall not be released to the Borrower until the end of the Security Period.
19.8	Location of accounts. The Borrower and each of the Guarantors, as the case may be, shall promptly:
(a)	comply with any requirement of the Agent as to the location or re-location of any Earnings Account and the Retention Account (or any of them); and
(b)	execute an Earnings Account Pledge, a Retention Account Pledge and/or any other documents which the Agent specifies to create or maintain in favor of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) any Earnings Account and the Retention Account (or any of them).
19.9	Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Retention Account with prior notice in order to discharge any amount due and payable under Clause 21 or 22 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 21 or 22.
19.10	Borrower’s obligations unaffected. The provisions of this Clause 19 (as distinct from a distribution effected under Clause 19.5) do not affect:
(a)	the liability of the Borrower to make payments of principal and interest on the due dates; or
(b)	any other liability or obligation of the Borrower or any other Security Party under any Finance Document.
20	EVENTS OF DEFAULT
20.1	Events of Default. An Event of Default occurs if:
(a)	the Borrower or any other Security Party fails to pay when due any principal payable under a Finance Document or under any document relating to a Finance Document or, in the case of interest and other sums payable on demand, within five (5) Business Days after the date when first demanded; or
(b)	any breach occurs of Clause 9.2(a), 11.2(b), 11.2(e) or 11.2(o); or

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(c)	any breach by the Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or
(d)	subject to any applicable grace period specified in the Finance Document, any breach by the Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or
(e)	any representation, warranty or statement made or repeated by, or by an officer or director of, the Borrower or another Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or
(f)	an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred on the part of a Security Party under any contract or agreement in excess of $5,000,000 (other than the Finance Documents) to which such Security Party is a party, and such event of default has not been cured within any applicable grace period;
(g)	any Financial Indebtedness of a Security Party in excess of $5,000,000 is not paid when due or within any applicable grace period or, only in the case of sums payable on demand, when first demanded, except for any such Financial Indebtedness which is being contested by such Security Party in good faith and through appropriate proceedings and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of the Ship; or
(h)	any Security Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or
(i)	any proceeding shall be instituted by or against any Security Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or
(j)	all or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, any Security Party are seized, nationalized, expropriated or compulsorily acquired by or under authority of any government; or
(k)	a creditor attaches or takes possession of, or a distress, execution, sequestration or process (each an “action”) is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues (the “assets”) of any Security Party in relation to a claim by such creditor which, in the reasonable opinion of the Majority Lenders, is likely to materially and adversely affect the ability of such Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any Finance Document to which it is a party and such Security Party does not procure that such action is lifted, released or expunged within 20 Business Days of such action being (i) instituted and (ii) notified to such Security Party; or

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(l)	any Security Party ceases or suspends or threatens to cease or suspend the carrying on of its business, or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement, except in the case of a sale or a proposed sale of a Ship by the Borrower that owns such Ship; or
(m)	a Ship becomes a Total Loss and insurance proceeds are not collected or received by the Security Trustee from the underwriters within 120 days of the Total Loss Date; or
(n)	an ERISA Funding Event or an ERISA Termination Event has occurred and is continuing; or
(o)	it becomes unlawful or impossible:

(i)	for the Borrower or any other Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document;
(ii)	for the Agent, the Security Trustee, the Lenders or the Swap Banks to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(p)	any consent necessary to enable a Guarantor to own, operate or charter the Ship owned by it or to enable any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
(q)	any material provision of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or
(r)	an Event of Default as defined in section 14 of a Master Agreement occurs; or
(s)	any event occurs or any circumstance arises or develops including, without limitation:

(i)	a change in the financial position, of any Security Party; or
(ii)	any accident or other event involving a Ship;

	and it becomes evident that the Security Parties are, or will later become, unable to discharge their liabilities under the Finance Documents as they fall due; or
(t)	there occurs or develops a change in the financial position, state of affairs or prospects of a Security Party which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on such Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due.

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20.2	Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:
(a)	the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i)	serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or
(ii)	serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand, provided that in the case of an Event of Default under either of Clauses 20.1(h) or (i), the Loan and all accrued interest and other amounts accrued or owing hereunder shall be deemed immediately due and payable without notice or demand therefor; and/or
(iii)	take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b)	the Security Trustee may, and if so instructed by the Agent, acting with the authorization of the Majority Lenders, the Security Trustee shall, take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders and/or the Swap Counterparties are entitled to take under any Finance Document or any applicable law.
20.3	Termination of Commitments. On the service of a notice under Clause 20.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall be cancelled.
20.4	Acceleration of Loan. On the service of a notice under Clause 20.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any other Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand, and the Security Trustee shall forthwith be entitled to enforce the Security Interests created by this Agreement and any other Finance Document in any manner available to it and in such sequence as the Security Trustee may, in its absolute discretion, determine.
20.5	Multiple notices; action without notice. The Agent may serve notices under Clauses 20.2(a)(i) and (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 20.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.
20.6	Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, each Swap Counterparty, the Security Trustee and each Security Party a copy of the text of any notice which the Agent serves on the Borrower under Clause 20.2. Such notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any other Security Party with any form of claim or defense.

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20.7	Creditor Party rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or Swap Counterparties under a Finance Document, a Master Agreement or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.
20.8	Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to any Security Party:
(a)	for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
(b)	as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realized from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,
	provided that nothing in this Clause 20.8 shall exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence, dishonesty or the willful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
20.9	Position of Swap Counterparties. Neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 20, to have any regard to the requirements of a Swap Counterparty except to the extent that such Swap Counterparty is also a Lender.
21	FEES AND EXPENSES
21.1	Fees. The Borrower shall pay to the Agent:
(a)	an amendment fee as required by the Fee Letter for distribution among the Lenders in the proportions agreed by the Agent and the Lead Arrangers;
(b)	during the Availability Period, a commitment fee equal to 40% of the applicable Margin payable quarterly in arrears on the Total Available Commitments for distribution among the Lenders pro rata to their Commitments; and
(c)	an annual agency fee of $75,000 payable annually in advance on June 2, 2012 and each anniversary thereof.
21.2	Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, including, without limitation, the reasonable fees and disbursements of a Creditor Party’s legal counsel and any local counsel retained by them.

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21.3	Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned, the amount of all expenses incurred by a Creditor Party in connection with:
(a)	any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;
(b)	any consent or waiver by the Lenders, the Swap Banks, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;
(c)	the valuation of any Collateral provided or offered under Clause 15 or any other matter relating to such Collateral; or
(d)	any step taken by a Lender or a Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
	There shall be recoverable under paragraph (d) the full amount of all reasonable legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
21.4	Intentionally omitted.
21.5	Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.
21.6	Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
22	INDEMNITIES
22.1	Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:
(a)	an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

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(b)	the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
(c)	any failure (for whatever reason) by a Security Party to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid on the amount concerned under Clause 7); or
(d)	the occurrence of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 20.
	It is understood that the indemnities provided in this Clause 22.1 shall not apply to any claim cost or expense which is a tax levied by a taxing authority on the indemnified party (which taxes are subject to indemnity solely as provided in Clause 23 below) but shall apply to any other costs associated with any tax which is not a Non-indemnified Tax.
22.2	Breakage costs. Without limiting its generality, Clause 22.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by a Lender:
(a)	in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and
(b)	in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.
22.3	Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with:
(a)	any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; or
(b)	any other Pertinent Matter,
	other than claims, expenses, liabilities and losses which are shown to have been caused by the gross negligence, dishonesty or willful misconduct of the officers or employees of the Creditor Party concerned.
	Without prejudice to its generality, this Clause 22.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

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22.4	Currency indemnity. If any sum due from the Borrower or any other Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:
(a)	making or lodging any claim or proof against the Borrower or any other Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
(b)	obtaining an order or judgment from any court or other tribunal; or
(c)	enforcing any such order or judgment,
	the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.
	In this Clause 22.4, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
	This Clause 22.4 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.
22.5	Application to Master Agreements. For the avoidance of doubt, Clause 22.4 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of that Master Agreement shall apply.
22.6	Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 22 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
22.7	Sums deemed due to a Lender. For the purposes of this Clause 22, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
23	NO SET-OFF OR TAX DEDUCTION
23.1	No deductions. All amounts due from a Security Party under a Finance Document shall be paid:
(a)	without any form of set-off, cross-claim or condition; and

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(b)	free and clear of any tax deduction except a tax deduction which such Security Party is required by law to make.
23.2	Grossing-up for taxes. If a Security Party is required by law to make a tax deduction from any payment:
(a)	such Security Party shall notify the Agent as soon as it becomes aware of the requirement;
(b)	such Security Party shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and
(c)	except if the deduction is for collection or payment of a Non-indemnified Tax of a Creditor Party, the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.
23.3	Evidence of payment of taxes. Within one (1) month after making any tax deduction, the relevant Security Party shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
23.4	Exclusion of tax on overall net income. In this Clause 23 “tax deduction” means any deduction or withholding for or on account of any present or future tax except a Non-indemnified Tax.
23.5	Indemnity for taxes. The Borrower hereby indemnifies and agrees to hold each Creditor Party harmless from and against all taxes other than Non-indemnified Taxes (including, without limitation, taxes and other taxes imposed on any amounts payable under this Clause 23.5) paid or payable by such person, whether or not such taxes or other taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which such Creditor Party makes written demand therefore specifying in reasonable detail the nature and amount of such taxes or other taxes.
23.6	Exclusion from indemnity and gross-up for taxes. The Borrower shall not be required to indemnify any Creditor Party pursuant to Clause 23.5, or pay any additional amounts to any Creditor Party pursuant to Clause 23.2, to the extent that:
(a)	the obligation to withhold amounts for taxes existed on the date such Lender (other than an original Lender) became a party to this Agreement or, with respect to payments to a New Lending Office, the date such Lender designated such New Lending Office with respect to a Loan; provided that this clause (a) shall not apply to the extent the indemnity payment or additional amounts any transferee, or Lender (or transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (a)) do not exceed the indemnity payment or additional amounts that the person making the transfer, or Lender (or transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such transfer or designation; or
(b)	the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Lender to comply with Clause 23.7 below.

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23.7	Delivery of tax forms.
(a)	Each Lender or transferee that is organized under the laws of a jurisdiction outside the United States (a “Non-U.S. Lender”) shall deliver to the Agent and the Borrower two properly completed and duly executed copies of either U.S. Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY or, upon request of the Borrower or the Agent, any subsequent versions thereof or successors thereto, in each case claiming complete exemption from, or a reduced rate of, U.S. Federal withholding tax with respect to payments of interest hereunder.
(b)	In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall provide to the Agent and the Borrower a properly completed form W-8BEN and certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly notify the Agent in the event any representation in such certificate is no longer accurate.
(c)	Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a “New Lending Office”). In addition, each Non-U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from the Agent or Borrower.
(d)	Notwithstanding any other provision of this Clause 23.7, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Clause 23.7 that such Non-U.S. Lender is not legally able to deliver.
23.8	Application to Master Agreements. For the avoidance of doubt, Clause 23 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of that Master Agreement shall apply.
24	ILLEGALITY, ETC
24.1	Illegality. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:
(a)	unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)	contrary to, or inconsistent with, any regulation,
	for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

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24.2	Notification of illegality. The Agent shall promptly notify the Borrower, the other Security Parties, the Security Trustee and the other Lenders of the notice under Clause 24.1 which the Agent receives from the Notifying Lender.
24.3	Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 24.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 24.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8, without penalty, premium or breakage costs.
24.4	Mitigation. If circumstances arise which would result in a notification under Clause 24.1 then, without in any way limiting the rights of the Notifying Lender under Clause 24.3, the Notifying Lender shall use reasonable endeavors to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:
(a)	have an adverse effect on its business, operations or financial condition; or
(b)	involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or
(c)	involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.
25	INCREASED COSTS
25.1	Increased costs. This Clause 25 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:
(a)	the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a Non-indemnified Tax); or
(b)	complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,
	the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.
	Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder, are deemed to have been introduced or adopted after the date hereof, regardless of the date enacted or adopted.
25.2	Meaning of “increased costs”. In this Clause 25, “increased costs” means, in relation to a Notifying Lender:

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(a)	an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;
(b)	a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;
(c)	an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or
(d)	a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;
(e)	but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 23 or an item arising directly out of the implementation or application of or compliance with Basel III or any other law or regulation which implements Basel III (whether such implementation, application or compliance is by a government, regulator, Creditor Party or any of its affiliates).
	For the purposes of this Clause 25.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.
25.3	Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the other Security Parties of the notice which the Agent received from the Notifying Lender under Clause 25.1.
25.4	Payment of increased costs. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
25.5	Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 25.4, the Borrower may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.
25.6	Prepayment; termination of Commitment. A notice under Clause 25.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:
(a)	on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

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(b)	on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.
25.7	Application of prepayment. Clause 8 shall apply in relation to the prepayment.
26	SET-OFF
26.1	Application of credit balances. Each Creditor Party may, upon the occurrence and during the continuance of an Event of Default, without prior notice:
(a)	apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and
(b)	for that purpose:

(i)	break, or alter the maturity of, all or any part of a deposit of the Borrower;
(ii)	convert or translate all or any part of a deposit or other credit balance into Dollars; and
(iii)	enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

26.2	Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 26.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).
26.3	Sums deemed due to a Lender. For the purposes of this Clause 26, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.
26.4	No Security Interest. This Clause 26 gives the Creditor Parties a contractual right of set-off only, and does not create any Security Interest over any credit balance of the Borrower.
27	TRANSFERS AND CHANGES IN LENDING OFFICES
27.1	Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of the Majority Lenders, transfer any of its rights, liabilities or obligations under any Finance Document.
27.2	Transfer by a Lender. Subject to Clause 27.4, a Lender (the “Transferor Lender”) may at any time, without needing the consent of the Borrower or any other Security Party, cause:

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(a)	its rights in respect of all or part of its Contribution; or
(b)	its obligations in respect of all or part of its Commitment; or
(c)	a combination of (a) and (b),
	to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution reasonably acceptable to the Borrower (a “Transferee Lender”) which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets in the shipping industry and is not an Affiliate of the Borrower by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.
	Notwithstanding the foregoing, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee shall be determined in accordance with Clause 31.
27.3	Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
(a)	sign the Transfer Certificate on behalf of itself, the Borrower, the other Security Parties, the Security Trustee, each of the other Lenders and each of the Swap Banks;
(b)	on behalf of the Transferee Lender, send to the Borrower and each other Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;
(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b),
	but the Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Transferor Lender and the Transferee Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations to the transfer to that Transferee Lender.
27.4	Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date, provided that it is signed by the Agent under Clause 27.3 on or before that date.
27.5	No transfer without Transfer Certificate. Except as provided in Clause 27.17, no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any other Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
27.6	Lender re-organization; waiver of Transfer Certificate. If a Lender enters into any merger, de-merger or other reorganization as a result of which all its rights or obligations vest in a successor, the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

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27.7	Effect of Transfer Certificate. The effect of a Transfer Certificate is as follows:
(a)	to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any other Security Party had against the Transferor Lender;
(b)	the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;
(c)	the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;
(d)	the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;
(e)	any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any other Security Party against the Transferor Lender had not existed;
(f)	the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 21, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and
(g)	in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.
	The rights and equities of the Borrower or any other Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.
27.8	Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 27.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least three (3) Business Days’ prior notice.

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27.9	Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.
27.10	Authorization of Agent to sign Transfer Certificates. The Borrower, the Security Trustee, each Lender and each Swap Bank irrevocably authorizes the Agent to sign Transfer Certificates on its behalf.
27.11	Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $5,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.
27.12	Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any other Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.
27.13	Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any other Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.
27.14	Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:
(a)	the date on which the Agent receives the notice; and
(b)	the date, if any, specified in the notice as the date on which the change will come into effect.
27.15	Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.
27.16	Intentionally omitted.
27.17	Security over Lenders’ rights. In addition to the other rights provided to Lenders under this Clause 27, each Lender may without consulting with or obtaining consent from the Borrower or any other Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:
(a)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

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(b)	in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;
	except that no such charge, assignment or Security Interest shall:

(i)	release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or
(ii)	require any payments to be made by the Borrower or any other Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

28	VARIATIONS AND WAIVERS
28.1	Variations, waivers etc. by Majority Lenders. Subject to Clause 28.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
28.2	Variations, waivers etc. requiring agreement of all Lenders. As regards the following, Clause 28.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:
(a)	a reduction in the Margin;
(b)	a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(c)	a change to the definition of “Majority Lenders”;
(d)	a change to Clause 3 or this Clause 28;
(e)	any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and
(f)	any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.
28.3	Intentionally omitted.
28.4	Variations, waivers etc. relating to the Servicing Banks. An amendment or waiver that relates to the rights or obligations of the Agent or the Security Trustee under Clause 31 may not be effected without the consent of the Agent or the Security Trustee.

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28.5	Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 28.1, 28.2, 28.3 or 28.4, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
(a)	a provision of this Agreement or another Finance Document; or
(b)	an Event of Default; or
(c)	a breach by the Borrower or another Security Party of an obligation under a Finance Document or the general law; or
(d)	any right or remedy conferred by any Finance Document or by the general law,
	and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
29	NOTICES
29.1	General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, electronic mail (“Email”) or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
29.2	Addresses for communications. A notice by letter or fax shall be sent:

(a)	to the Borrower	Scorpio Tankers Inc.
	or any Guarantor:	9, Boulevard Charles III
		Monaco 98000
		Attention: Luca Forgione
	with a copy to:	150 E. 58th Street
		New York, New York 10155
		Attention: Chief Financial Officer
		Fax No: +212-542-1618

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(b)	to a Lender:	At the address below its name in Schedule 1 or in the relevant Transfer Certificate or Lender Accession Agreement.
(c)	to a Swap Bank	At the address below its name in Schedule 2 or in the relevant Swap Bank Accession Agreement.

(d)	to the Agent:	Nordea Bank Finland PLC, New York Branch
		437 Madison Avenue
		New York, New York 10022
		Attention: Loan Administration
		Fax No: +212-750-9188
(e)	to the Security Trustee:	Nordea Bank Finland PLC, New York Branch
		437 Madison Avenue
		New York, New York 10022
		Attention: Loan Administration
		Fax No: +212-750-9188

	or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Lenders, the Swap Banks and the Security Parties.
29.3	Effective date of notices. Subject to Clauses 29.4 and 29.5:
(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;
(b)	a notice which is sent by Email shall be deemed to be served, and shall take effect, at the time when it is actually received in readable form; and
(c)	a notice which is sent by fax shall be deemed to be served, and shall take effect, two (2) hours after its transmission is completed.
29.4	Service outside business hours. However, if under Clause 29.3 a notice would be deemed to be served:
(a)	on a day which is not a business day in the place of receipt; or
(b)	on such a business day, but after 5:00 p.m. local time,
	the notice shall (subject to Clause 29.5) be deemed to be served, and shall take effect, at 9:00 a.m. on the next day which is such a business day.
29.5	Illegible notices. Clauses 29.3 and 29.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
29.6	Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

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(a)	the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
(b)	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
29.7	Electronic communication between the Agent and a Lender or a Swap Bank. Any communication to be made between the Agent and a Lender or a Swap Bank under or in connection with the Finance Documents may be made by Email or other electronic means, if the Agent and the relevant Lender or Swap Bank:
(a)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(b)	notify each other in writing of their Email address and/or any other information required to enable the sending and receipt of information by that means; and
(c)	notify each other of any change to their respective Email addresses or any other such information supplied to them.
	Any electronic communication made between the Agent and a Lender or a Swap Bank will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender or a Swap Bank to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose.
29.8	English language. Any notice under or in connection with a Finance Document shall be in English.
29.9	Meaning of “notice”. In this Clause 29, “notice” includes any demand, consent, authorization, approval, instruction, waiver or other communication.
30	SUPPLEMENTAL
30.1	Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:
(a)	cumulative;
(b)	may be exercised as often as appears expedient; and
(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.
30.2	Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

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30.3	Counterparts. A Finance Document may be executed in any number of counterparts.
30.4	Binding Effect. This Agreement shall become effective on the Effective Date and thereafter shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.
31	THE SERVICING BANKS
31.1	Appointment and Granting.
(a)	The Agent. Each of the Lenders and the Swap Banks appoints and authorizes (with a right of revocation) the Agent to act as its agent hereunder and under any of the other Finance Documents with such powers as are specifically delegated to the Agent by the terms of this Agreement and of any of the other Finance Documents, together with such other powers as are reasonably incidental thereto.
(b)	The Security Trustee.

(i)

Authorization of Security Trustee. Each of the Lenders, the Swap Banks and the Agent appoints and authorizes (with a right of revocation) the Security Trustee to act as security trustee hereunder and under the other Finance Documents (other than the Notes) with such powers as are specifically delegated to the Security Trustee by the terms of this Agreement and such other Finance Documents, together with such other powers as are reasonably incidental thereto.

(ii)

Granting Clause. To secure the payment of all sums of money from time to time owing (i) to the Lenders under the Finance Documents, and (ii) to the Swap Banks under the Master Agreements, and the performance of the covenants of the Borrower and any other Security Party herein and therein contained, and in consideration of the premises and of the covenants herein contained and of the extensions of credit by the Lenders, the Security Trustee does hereby declare that it will hold as such trustee in trust for the benefit of the Lenders, the Agent and the Swap Banks, from and after the execution and delivery thereof, all of its right, title and interest as mortgagee in, to and under the Mortgages and its right, title and interest as assignee and secured party under the other Finance Documents (the right, title and interest of the Security Trustee in and to the property, rights and privileges described above, from and after the execution and delivery thereof, and all property hereafter specifically subjected to the Security Interest of the indenture created hereby and by the Finance Documents by any amendment hereto or thereto are herein collectively called the “Estate”); TO HAVE AND TO HOLD the Estate unto the Security Trustee and its successors and assigns forever, BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the Lenders, the Agent and the Swap Banks and their respective successors and assigns without any priority of any one over any other, UPON THE CONDITION that, unless and until an Event of Default under this Agreement shall have occurred and be continuing, the Guarantors shall be permitted, to the exclusion of the Security Trustee, to possess and use the Ships. IT IS HEREBY COVENANTED, DECLARED AND AGREED that all property subject or to become subject hereto is to be held, subject to the further covenants, conditions, uses and trusts hereinafter set forth, and each Security Party, for itself and its respective successors and assigns, hereby covenants and agrees to and with the Security Trustee and its successors in said trust, for the equal and proportionate benefit and security of the Lenders, the Agent and the Swap Banks as hereinafter set forth.

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(iii) Acceptance of Trusts. The Security Trustee hereby accepts the trusts imposed upon it as Security Trustee by this Agreement, and the Security Trustee covenants and agrees to perform the same as herein expressed and agrees to receive and disburse all monies constituting part of the Estate in accordance with the terms hereof.

31.2	Scope of Duties. Neither the Agent nor the Security Trustee (which terms as used in this sentence and in Clause 31.5 hereof shall include reference to their respective affiliates and their own respective and their respective affiliates’ officers, directors, employees, agents and attorneys-in-fact):
(a)	shall have any duties or responsibilities except those expressly set forth in this Agreement and in any of the Finance Documents, and shall not by reason of this Agreement or any of the Finance Documents be (except, with respect to the Security Trustee, as specifically stated to the contrary in this Agreement) a trustee for a Lender or a Swap Bank;
(b)	shall be responsible to the Lenders or the Swap Banks for any recitals, statements, representations or warranties contained in this Agreement or in any of the Finance Documents, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any of the other Finance Documents, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any of the other Finance Documents or any other document referred to or provided for herein or therein or for any failure by a Security Party or any other person to perform any of its obligations hereunder or thereunder or for the location, condition or value of any property covered by any Security Interest under any of the Finance Documents or for the creation, perfection or priority of any such Security Interest;
(c)	shall be required to initiate or conduct any litigation or collection proceedings hereunder or under any of the Finance Documents unless expressly instructed to do so in writing by the Majority Lenders; or
(d)	shall be responsible for any action taken or omitted to be taken by it hereunder or under any of the Finance Documents or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct.  Each of the Security Trustee and the Agent may employ agents and attorneys-in-fact and neither the Security Trustee nor the Agent shall be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.  Each of the Security Trustee and the Agent may deem and treat the payee of a Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent, together with the written consent of the Borrower to such assignment or transfer.

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31.3	Reliance. Each of the Security Trustee and the Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telefacsimile, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper person or persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Security Trustee or the Agent, as the case may be. As to any matters not expressly provided for by this Agreement or any of the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions signed by the Majority Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.
31.4	Knowledge. Neither the Security Trustee nor the Agent shall be deemed to have knowledge or notice of the occurrence of a Potential Event of Default or Event of Default (other than, in the case of the Agent, the non-payment of principal of or interest on the Loan) unless each of the Security Trustee and the Agent has received notice from a Lender or the Borrower specifying such Potential Event of Default or Event of Default and stating that such notice is a “Notice of Default”. If the Agent receives such a notice of the occurrence of such Potential Event of Default or Event of Default, the Agent shall give prompt notice thereof to the Security Trustee, the Swap Banks and the Lenders (and shall give each Lender prompt notice of each such non-payment). Subject to Clause 31.8 hereof, the Security Trustee and the Agent shall take such action with respect to such Potential Event of Default or Event of Default or other event as shall be directed by the Majority Lenders, except that, unless and until the Security Trustee and the Agent shall have received such directions, each of the Security Trustee and the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Event of Default or Event of Default or other event as it shall deem advisable in the best interest of the Lenders and the Swap Banks.
31.5	Security Trustee and Agent as Lenders. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee or Agent, as the case may be) in its individual capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Security Trustee or the Agent, as the case may be, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include each of the Security Trustee and the Agent in their respective individual capacities. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee and Agent, as the case may be) and their respective affiliates may (without having to account therefor to a Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrower and any of its subsidiaries or affiliates as if it were not acting as the Security Trustee or the Agent, as the case may be, and each of the Security Trustee and the Agent and their respective affiliates may accept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.
31.6	Indemnification of Security Trustee and Agent. The Lenders severally agree, ratably in accordance with the aggregate principal amount of each Lender’s Contribution in the Loan, to indemnify each of the Agent and the Security Trustee (to the extent not reimbursed under other provisions of this Agreement, but without limiting the obligations of the Borrower under said other provisions) for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Security Trustee or the Agent in any way relating to or arising out of this Agreement or any of the other Finance Documents or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby (including, without limitation, the costs and expenses which the Borrower is to pay hereunder, but excluding, unless an Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of their respective agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, except that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

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31.7	Reliance on Security Trustee or Agent. Each Lender and each Swap Bank agrees that it has, independently and without reliance on the Security Trustee, the Agent or any other Lender or Swap Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and decision to enter into this Agreement and that it will, independently and without reliance upon the Security Trustee, the Agent or any other Lender or Swap Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the Finance Documents. None of the Security Trustee or the Agent shall be required to keep itself informed as to the performance or observance by the Borrower or the Guarantors of this Agreement or any of the Finance Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Borrower or any Guarantor. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders and/or the Swap Banks by the Security Trustee or the Agent hereunder, neither the Security Trustee nor the Agent shall have any duty or responsibility to provide a Lender or a Swap Bank with any credit or other information concerning the affairs, financial condition or business of the Borrower, any Guarantor or any subsidiaries or affiliates thereof which may come into the possession of the Security Trustee, the Agent or any of their respective affiliates.
31.8	Actions by Security Trustee and Agent. Except for action expressly required of the Security Trustee or the Agent hereunder and under the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Clause 31.6 against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.
31.9	Resignation and Removal. Subject to the appointment and acceptance of a successor Security Trustee or Agent (as the case may be) as provided below, each of the Security Trustee and the Agent may resign at any time by giving notice thereof to the Lenders, the Swap Banks and the Borrower, and the Security Trustee or the Agent may be removed at any time with or without cause by the Majority Lenders by giving notice thereof to the Agent, the Security Trustee, the Lenders, the Swap Banks and the Borrower. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Security Trustee or Agent, as the case may be. If no successor Security Trustee or Agent, as the case may be, shall have been so appointed by the Lenders or, if appointed, shall not have accepted such appointment within 30 days after the retiring Security Trustee’s or Agent’s, as the case may be, giving of notice of resignation or the Majority Lenders’ removal of the retiring Security Trustee or Agent, as the case may be, then the retiring Security Trustee or Agent, as the case may be, may, on behalf of the Lenders and the Swap Banks, appoint a successor Security Trustee or Agent. Upon the acceptance of any appointment as Security Trustee or Agent hereunder by a successor Security Trustee or Agent, such successor Security Trustee or Agent, as the case may be, shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Security Trustee or Agent, as the case may be, and the retiring Security Trustee or Agent shall be discharged from its duties and obligations hereunder. After any retiring Security Trustee or Agent’s resignation or removal hereunder as Security Trustee or Agent, as the case may be, the provisions of this Clause 31 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Security Trustee or the Agent, as the case may be.

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31.10	Release of Collateral. Without the prior written consent of the Majority Lenders and the Swap Banks, neither the Security Trustee nor the Agent will consent to any modification, supplement or waiver under any of the Finance Documents nor without the prior written consent of all of the Lenders and the Swap Banks release any Collateral or otherwise terminate any Security Interest under the Finance Documents, except that no such consent is required, and each of the Security Trustee and the Agent is authorized, to release any Security Interest covering property if the Secured Liabilities have been paid and performed in full or which is the subject of a disposition of property permitted hereunder or to which the Lenders have consented.
32	LAW AND JURISDICTION
32.1	Governing law. THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN A FINANCE DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.
32.2	Consent to Jurisdiction.
(a)	Each of the Borrower and the Guarantors hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Finance Documents to which such Security Party is a party or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State Court or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b)	Nothing in this Clause 32.2 shall affect the right of a Creditor Party to bring any action or proceeding against a Security Party or its property in the courts of any other jurisdictions where such action or proceeding may be heard.

98

(c) Each of the Borrower and the Guarantors hereby irrevocably and unconditionally waives to the fullest extent it may legally and effectively do so:

(i)

any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Finance Document to which it is a party in any New York State or Federal court and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court; and

(ii)

any immunity from suit, the jurisdiction of any court in which judicial proceedings may at any time be commenced with respect to this Agreement or any other Finance Document or from any legal process with respect to itself or its property (including without limitation attachment prior to judgment, attachment in aid of execution of judgment, set-off, execution of a judgment or any other legal process), and to the extent that in any such jurisdiction there may be attributed to such person such an immunity (whether or not claimed), such person hereby irrevocably agrees not to claim such immunity.

(d)	Each of the Borrower and the Guarantors hereby agrees to appoint Seward & Kissel LLP, with offices currently located at One Battery Park Plaza, New York, New York 10004, Attention: Lawrence Rutkowski, as its designated agent for service of process for any action or proceeding arising out of or relating to this Agreement or any other Finance Document.  Each of the Borrower and the Guarantors also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to its address specified in Clause 29.2.  Each of the Borrower and the Guarantors also agrees that service of process may be made on it by any other method of service provided for under the applicable laws in effect in the State of New York.
32.3	Creditor Party rights unaffected. Nothing in this Clause 32 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
32.4	Meaning of “proceedings”. In this Clause 32, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.
33	WAIVER OF JURY TRIAL
33.1	WAIVER. EACH OF THE BORROWER, THE GUARANTORS AND THE CREDITOR PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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34 PATRIOT ACT NOTICE

34.1 PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrower and the Guarantors that pursuant to the requirements of the Patriot Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies each Security Party, which information includes the name and address of each Security Party and such other information that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the PATRIOT Act.

[EXECUTION PAGE FOLLOWS ON NEXT PAGE]

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EXECUTION PAGE

WHEREFORE, the parties hereto have caused this Amended and Restated Loan Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower By: /s/ Brian M Lee                     Name: Brian M. Lee Title: Chief Financial Officer NOEMI SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                     Name: Brian M. Lee Title: Chief Financial Officer	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank By: / s/ Gerald E. Chelius, Jr.                     Name: Gerald E. Chelius, Jr. Title: SVP Credit By: /s/ Justin K. Martin                              Name: Justin K. Martin Title: Assistant Vice President
SENATORE SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                     Name: Brian M. Lee Title: Chief Financial Officer VENICE SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                     Name: Brian M. Lee Title: Chief Financial Officer	DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank By: /s/ Nikolai A Nachamkin                     Name: Nikolai A. Nachamkin Title: Senior Vice President By: /s/ Evan Uhlick                                     Name: Evan Uhlick Title: Vice President
STI CONQUEROR SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                     Name: Brian M. Lee Title: Chief Financial Officer	ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By: /s/ J.A.L.M Gorgels                               Name: J.A.L.M. Gorgels Title: Director ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By: /s/ K.H. Tieleman                                    Name: K. H. Tieleman Title: Director

101

STI GLADIATOR SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                    

Name: Brian M. Lee

Title: Secretary

STI HARMONY SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                    

Name: Brian M. Lee

Title: Secretary

STI HERITAGE SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                    

Name: Brian M. Lee

Title: Secretary

STI HIGHLANDER SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                    

Name: Brian M. Lee

Title: Secretary

STI MATADOR SHIPPING COMPANY LIMITED,

as Guarantor

By: /s/ Brian M Lee                    

Name: Brian M. Lee

Title: Secretary

102 

EX-4.2

To:	(1)	Nordea Bank Finland plc, New York Branch
		437 Madison Avenue, 21st Floor
		New York, New York 10022
		(as Agent, Lead Arranger, Security Trustee, Lender and Swap Bank)
	(2)	DNB NOR Bank ASA
		200 Park Avenue, 31st Floor
		New York, NY 10166-0396
		(as Lead Arranger, Lender and Swap Bank)
	(3)	ABN AMRO Bank N.V.
		Coolsingel 93
		3012 AE  Rotterdam
		The Netherlands
		(as Lead Arranger, Lender and Swap Bank)

September 22, 2011

Dear Sirs:

We refer to the Amended and Restated Loan Agreement dated as of July 12, 2011 (the “Loan Agreement”) among (i) Scorpio Tankers Inc. (the “Borrower”), (ii) Noemi Shipping Company Limited, Senatore Shipping Company Limited, Venice Shipping Company Limited, STI Conqueror Shipping Company Limited, STI Gladiator Shipping Company Limited, STI Harmony Shipping Company Limited, STI Heritage Shipping Company Limited, STI Highlander Shipping Company Limited and STI Matador Shipping Company Limited (the “Guarantors”), (iii) the banks and financial institutions listed therein as lenders (the “Lenders”), (iv) the banks and financial institutions listed therein as swap banks (the “Swap Banks”), (v) Nordea Bank Finland plc, New York Branch (the “Agent”), (vi) Nordea Bank Finland plc, New York Branch (the “Security Trustee”) and (vii) Nordea Bank Finland plc, New York Branch, DnB NOR Bank ASA and ABN AMRO Bank N.V. (the “Lead Arrangers”), relating to a reducing revolving loan facility of up to US$137,039,071.68. Words and expressions defined in the Loan Agreement shall have the same meaning when used herein except as expressly provided in this Letter.

We request that, by countersigning this Letter, you confirm your agreement to amend the definition of “Consolidated Liquidity” and the terms of Clauses 12.4 and 12.5 of the Loan Agreement, presently providing as follows:

““Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents, in each case held by the Borrower on a freely available and unencumbered basis;”

“12.4 Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing quarter basis from and including the third fiscal quarter of 2011, provided that for the third fiscal quarter of 2012 and all periods thereafter such ratio shall be calculated on a trailing four quarter basis.”

“12.5 Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels.”

to read as follows:

““Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash, (b) Cash Equivalents and (c) the Total Available Commitment, in each case held by the Borrower or any of its subsidiaries on a freely available and unencumbered basis;”

“12.4

Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00, provided that for the first fiscal quarter of 2013 and all periods thereafter such ratio shall be 2.50 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

“12.5

Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels. At all times, the Consolidated Liquidity shall have not less than $15,000,000 in cash and Cash Equivalents. For the period September 22, 2011 until December 31, 2012, the Borrower shall maintain Consolidated Liquidity of not less than $20,000,000, inclusive of any amounts otherwise maintained pursuant to this Section.”

The Guarantors, by signature of this Letter, each confirm their approval to the amendments to the Loan Agreement set out herein and confirm that the guarantee of Clause 16 of the Loan Agreement remains in full force and effect.

Other than as set out in this Letter, the provisions of the Loan Agreement shall remain unchanged and in full force and effect.

We agree that this Letter shall constitute a Finance Document for the purposes of the Loan Agreement.

2

The provisions of Clause 32 (Law and Jurisdiction) of the Loan Agreement shall apply to this Letter as if set out in full but so that references to “this Agreement” are amended to read “this Letter”. All remaining provisions of the Loan Agreement and the Finance Documents shall remain in full force and effect.

Yours faithfully

/s Brian M Lee                                            

Brian M. Lee

Chief Financial Officer

Scorpio Tankers Inc.

3

Accepted and agreed this _____day of September 2011 by:

NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank

By: /s/ Martin Lunder                             

Name: Martin Lunder

Title: Senior Vice President

By: /s/ Henning Lyche Christiansen    

Name: Henning Lyche Christiansen

Title: First Vice President

DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank

By: /s/ Nikolai A Nachamkin                 

Name: Nikolai A. Nachamkin

Title: Senior Vice President

By: /s/ Evan Uhlick                                 

Name: Evan Uhlick

Title: Vice President

ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank

By: /s/ A.C.A.J. Diesbroeck                  

Name:

Title:

By: /s/ J.A.L.M Gorgels                         

Name:

Title:

4

We hereby confirm and acknowledge that we have read and understood the terms and conditions of the above Letter and agree in all respects to the same and confirm that the guarantee in Clause 16 of the Loan Agreement shall remain in full force and effect and shall continue to stand as security for the Guaranteed Obligations stated therein.

NOEMI SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

SENATORE SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

VENICE SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

STI CONQUEROR SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

STI GLADIATOR SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

STI HARMONY SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

5

STI HERITAGE SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

STI HIGHLANDER SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

STI MATADOR SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Secretary

6

EX-4.3

Execution Version

Dated: as of December 22, 2011

SCORPIO TANKERS INC.

as Borrower

NOEMI SHIPPING COMPANY LIMITED,

SENATORE SHIPPING COMPANY LIMITED,

VENICE SHIPPING COMPANY LIMITED,

STI CONQUEROR SHIPPING COMPANY LIMITED,

STI GLADIATOR SHIPPING COMPANY LIMITED,

STI HARMONY SHIPPING COMPANY LIMITED,

STI HERITAGE SHIPPING COMPANY LIMITED,

STI HIGHLANDER SHIPPING COMPANY LIMITED

and

STI MATADOR SHIPPING COMPANY LIMITED

as Joint and Several Guarantors

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lenders

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Swap Banks

NORDEA BANK FINLAND PLC, NEW YORK BRANCH

as Agent

and as Security Trustee

– and –

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lead Arrangers

_______________________________________________________

FIRST AMENDATORY AGREEMENT

______________________________________________________

Amending and Supplementing the Amended and Restated Loan Agreement

dated as of July 12, 2011, as amended by a Letter Agreement dated September 22, 2011

FIRST AMENDATORY AGREEMENT dated as of December 22, 2011 (this “First Amendatory Agreement”)

AMONG

(1)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as borrower (the “Borrower”);
(2)	NOEMI SHIPPING COMPANY LIMITED, SENATORE SHIPPING COMPANY LIMITED, VENICE SHIPPING COMPANY LIMITED, STI CONQUEROR SHIPPING COMPANY LIMITED, STI GLADIATOR SHIPPING COMPANY LIMITED, STI HARMONY SHIPPING COMPANY LIMITED, STI HERITAGE SHIPPING COMPANY LIMITED, STI HIGHLANDER SHIPPING COMPANY LIMITED and STI MATADOR SHIPPING COMPANY LIMITED, each a corporation incorporated and existing under the laws of the Republic of The Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several guarantors (the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lenders (the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as swap banks (the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(6)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as security trustee for the Lenders and the Swap Banks (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(7)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lead arrangers (the “Lead Arrangers”, which expression includes their respective successors, transferees and assigns).

WITNESSETH THAT:

WHEREAS, the Borrower, the Guarantors, the Lenders, the Swap Banks, the Agent, the Security Trustee and the Lead Arrangers are parties to an Amended and Restated Loan Agreement dated as of July 12, 2011 (as amended by a Letter Agreement dated September 22, 2011, the “Loan Agreement”).

WHEREAS, upon the terms and conditions stated herein, the parties hereto have agreed pursuant to Clause 28 of the Loan Agreement to (a) amend the definition of “Margin”, (b) waive compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement during the Waiver Period (as defined below), and (c) amend Clause 12.4 with effect on and after October 1, 2013.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1	DEFINITIONS
1.1	Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Loan Agreement. In addition:
	“Waiver Period” means the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on the earliest to occur of (a) September 30, 2013 at 11:59:59 p.m. New York City time and (b) the occurrence after the commencement of the Waiver Period of any Event of Default, including, without limitation, any failure to comply with the provisions of this First Amendatory Agreement.
2	AMENDMENTs to the loan agreement; waivers of covenants
2.1	Amendments.
(a)	Subject to Clause 3 below, the definition of “Margin” in the Loan Agreement is amended and restated to read as follows:
	““Margin” means:

(a) During the period commencing on the initial Drawdown Date and ending on December 29, 2011 at 11:59:59 p.m.:

(i)	3.00% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than or equal to 50%; and
(ii)	3.50% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;

(b)	3.50% per annum during the period commencing on December 30, 2011 at 12:00 a.m. New York City time and ending on September 30, 2013 at 11:59:59 p.m. New York City time; and
(c)	During the period commencing on October 1, 2013 at 12:00 a.m. New York City time and at all times thereafter:

(i)	3.25% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than or equal to 50%; and
(ii)	3.50% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;”

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(b) Subject to Clause 3 below, Clause 12.4 is amended and restated to read as follows on and after October 1, 2013:

“12.4 Minimum interest coverage. Commencing on October 1, 2013, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

2.2

Waivers. Subject to Clause 3 below, the Creditor Parties agree to waive compliance by the Borrower during the Waiver Period with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (the “Specified Waivers”), provided that at all times during the Waiver Period, the Borrower (i) shall not declare or pay any dividends unless the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is equal to or exceeds 2.00 to 1.00, and (ii) shall be in compliance with the following covenants (and for the avoidance of doubt the Borrower’s compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (as amended hereby in the case of Clause 12.4) shall be reinstated immediately upon the expiration of the Waiver Period and shall be required at all times thereafter):

(a)

Minimum interest coverage.

(i)	During the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on December 31, 2012 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.25 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(ii)	During the period commencing on January 1, 2013 at 12:00 a.m. New York City time and ending on March 31, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.50 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(iii)	During the period commencing on April 1, 2013 at 12:00 a.m. New York City time and ending on June 30, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.75 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(iv)	During the period commencing on July 1, 2013 at 12:00 a.m. New York City time and ending on September 30, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis.

(b) Free liquidity. The Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $25,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $25,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels. At all times during the Waiver Period, the Consolidated Liquidity shall consist of not less than $15,000,000 in cash and Cash Equivalents.

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3	CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
3.1	Conditions precedent and subsequent. The effectiveness of this First Amendatory Agreement shall be subject to the completion, to the satisfaction of the Agent, of the following conditions precedent and subsequent:
(a)	On or before 5:00 p.m. New York City time on December 30, 2011 (in the case of subparagraphs (i), (ii), (iv) and (v) below) and January 10, 2012 (in the case of subparagraph (iii) below) (each, a “Conditions Precedent Deadline”), the Agent shall have received:

(i)	a copy (with the original to follow) of this First Amendatory Agreement, duly executed by the parties hereto;
(ii)	copies of certificates dated as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline, certifying that the Borrower and each of the Guarantors is duly incorporated or formed and in good standing under the laws of its jurisdiction of incorporation or formation;
(iii)	copies of resolutions of the directors and, if necessary, the shareholders of the Borrower and each of the Guarantors authorizing the execution of this First Amendatory Agreement and all other documents required hereby to which the Borrower or that Guarantor is to be a party, in each case certified as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline by an officer of such party as being a true and correct copy thereof;
(iv)	a copy (with the original to follow) of any power of attorney under which this First Amendatory Agreement and of all other documents required hereby is to be executed on behalf of the Borrower or a Guarantor; and
(v)	an amendment fee of $332,428.29.

(b) On or before 5:00 p.m. New York City time on January 10, 2012 (in the case of subparagraph (i) below) and January 20, 2012 (in the case of subparagraphs (ii) and (iii) below) (each, a “Conditions Subsequent Deadline”), the Agent shall have received:

(i)	a valuation of the Fair Market Value of each Ship, dated not earlier than December 15, 2011, based on the average of two (2) valuations each prepared and addressed to the Agent by an Approved Broker;
(ii)	an original addendum to the Mortgage in respect of each of the Ships, each such addendum to be in form and substance satisfactory to the Agent and duly executed by the parties thereto, together with documentary evidence that such addendum has been duly recorded according to the laws of the Republic of The Marshall Islands; and
(iii)	favorable legal opinions from lawyers appointed by the Borrower on such matters concerning the laws of such relevant jurisdictions as the Agent may require.

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3.2	Waiver of conditions precedent or subsequent. The Agent, with the consent of the Lenders and the Swap Banks, may waive one or more of the conditions referred to in Clause 3.1(a) or 3.1(b) provided that the Borrower delivers to the Agent a written undertaking to satisfy such conditions within ten (10) Business Days (or such longer period as the Agent may specify) after the Agent grants such waiver.
3.3	Failure to complete conditions precedent or subsequent. If the Borrower and the Guarantors fail to complete all or any of the conditions required by Clause 3.1(a) by the applicable Conditions Precedent Deadline or Clause 3.1(b) by the applicable Conditions Subsequent Deadline, the Borrowers and the Guarantors acknowledge and agree that the amendments made in Clause 2.1 hereof and the Specified Waivers made in Clause 2.2 hereof shall be null, void and of no effect whatsoever and that the Creditor Parties shall be entitled to all rights and to exercise all remedies afforded to them under the terms of the Loan Agreement (all of which are expressly reserved) as if (a) such amendments had not been made and (b) the Specified Waivers had not been granted by this First Amendatory Agreement.
4	EFFECT OF AMENDMENTS
4.1	References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Loan Agreement as amended hereby.
4.2	Effect of amendments. Subject to the terms of this First Amendatory Agreement, with effect on and from the date hereof (subject to fulfillment or waiver of the conditions precedent and conditions subsequent stated in Clause 3 above) the Loan Agreement shall be, and shall be deemed by this First Amendatory Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents shall be, and shall be deemed by this First Amendatory Agreement to have been, amended as follows:
(a)	the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended or supplemented by this First Amendatory Agreement; and
(b)	by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this First Amendatory Agreement.
4.3	No other amendments; ratification.
(a)	Except as amended hereby, all other terms and conditions of the Loan Agreement and the other Finance Documents remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.

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(b)	Without limiting the foregoing, each of the Guarantors acknowledges and agrees that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
(c)	The Borrower and the Guarantors acknowledge and agree that the Loan Agreement shall, together with this First Amendatory Agreement, be read and construed as a single agreement.
5	REPRESENTATIONS AND WARRANTIES
5.1	Authority. The execution and delivery by each of the Borrower and the Guarantors of this First Amendatory Agreement and the performance by each of the Borrower and the Guarantors of all of its agreements and obligations under the Loan Agreement, as amended or temporarily waived hereby, are within such Security Party’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Security Party, and no consent of any third party is required in connection with the transactions contemplated by this First Amendatory Agreement.
5.2	Enforceability. This First Amendatory Agreement and the Loan Agreement, as amended hereby, constitute the legal, valid and binding obligations of each of the parties hereto and are enforceable against such parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought.
5.3	Certifications. Each of the Borrower and the Guarantors certifies that:
(a)	there is no proceeding for the dissolution or liquidation of such party;
(b)	the representations and warranties contained in the Loan Agreement, as amended hereby, are true and correct as though made on and as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;
(c)	there is no material misstatement of fact in any information provided by each of the Borrower and the Guarantors to the Agent or the Lender or the Swap Banks since May 3, 2011, and such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d)	there is no event occurring and continuing, or resulting from this First Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(e)	there have been no amendments to the constitutional documents of any Security Party since the date such documents were delivered previously to the Agent.
6	MISCELLANEOUS

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6.1	Governing law. THIS FIRST AMENDATORY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401).
6.2	Counterparts. This First Amendatory Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
6.3	Severability. Any provision of this First Amendatory Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.
6.4	Payment of expenses. The Borrower agrees to pay or reimburse each of the Creditor Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this First Amendatory Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Creditor Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Creditor Parties in connection with the foregoing.
6.5	Headings and captions. The headings captions in this First Amendatory Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

[SIGNATURE PAGE FOLLOWS]

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WHEREFORE, the parties hereto have caused this First Amendatory Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower By: /s/ Brian M Lee                                      Name: Brian M. Lee Title: Chief Financial Officer NOEMI SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                                      Name: Brian M. Lee Title: Secretary	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank By: /s/ Martin Lunder                                Name: Martin Lunder Title: Senior Vice President By: /s/ Henning Lyche Christiansen       Name: Henning Lyche Christiansen Title: First Vice President
SENATORE SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                                        Name: Brian M. Lee Title: Secretary VENICE SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                                        Name: Brian M. Lee Title: Secretary	DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank By: /s/ Nikolai A Nachamkin                       Name: Nikolai A. Nachamkin Title: Senior Vice President By: /s/ Giacomo Landi                                  Name: Giacomo Landi Title: Senior Vice President
STI CONQUEROR SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                                        Name: Brian M. Lee Title: Secretary	ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By: /s/ W.P. van Aerssen                            Name: Title:

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STI GLADIATOR SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                       

Name: Brian M. Lee

Title: Secretary

STI HARMONY SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                       

Name: Brian M. Lee

Title: Secretary

STI HERITAGE SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                       

Name: Brian M. Lee

Title: Secretary

STI HIGHLANDER SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                       

Name: Brian M. Lee

Title: Secretary

STI MATADOR SHIPPING COMPANY LIMITED,

as Guarantor

By: /s/ Brian M Lee                                       

Name: Brian M. Lee

Title: Secretary

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EX-4.9

To:	DVB Bank SE, as Agent and Security Trustee
	Platz der Republik 6
	60325 Frankfurt am Main
	Germany

September 28, 2011

Dear Sirs:

We refer to the Loan Agreement dated as of March 9, 2011 (the “Loan Agreement”) among (i) STI Spirit Shipping Company Limited, a Marshall Islands corporation, as borrower (the “Borrower”), (ii) Scorpio Tankers Inc., a Marshall Islands corporation, as guarantor (the “Guarantor”), (iii) the banks and financial institutions named in Schedule 1 to the Loan Agreement as Lenders and (iv) DVB Bank SE as Agent (in such capacity, the “Agent”) and Security Trustee (in such capacity, the “Security Trustee”) and as Arranger. Words and expressions defined in the Loan Agreement shall have the same meaning when used herein except as expressly provided in this Letter.

We request that, by countersigning this Letter, you confirm your agreement to amend the terms of Clause 12.4 of the Loan Agreement, presently providing as follows:

“12.4 Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing quarter basis from and including the second fiscal quarter of 2012, provided that for the third fiscal quarter of 2012 and all periods thereafter such ratio shall be calculated on a trailing four quarter basis.

to read as follows:

“12.4 Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00, provided that for the first fiscal quarter of 2013 and all periods thereafter such ratio shall be 2.50 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

The Guarantor, by its signature of this Letter, confirms its consent to the amendments to the Loan Agreement set out herein and confirms that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.

Other than as set out in this Letter, the provisions of the Loan Agreement shall remain unchanged and in full force and effect.

We agree that this Letter shall constitute a Finance Document for the purposes of the Loan Agreement.

The provisions of Clause 32 (Law and Jurisdiction) of the Loan Agreement shall apply to this Letter as if set out in full but so that references to “this Agreement” are amended to read “this Letter”. All remaining provisions of the Loan Agreement and the Finance Documents shall remain in full force and effect.

Yours faithfully

/s/ Brian M. Lee                  

Brian M. Lee

Secretary

STI Spirit Shipping Company Limited

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Accepted and agreed this       28th      day of September 2011 by:

DVB BANK SE, as Agent on behalf of the Majority Lenders and as Agent and Security Trustee in their own rights

By: /s/ Daniel C. Rodgers                  

Name: Daniel C. Rodgers

Title: Attorney-in-Fact

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We hereby confirm and acknowledge that we have read and understood the terms and conditions of the above Letter and agree in all respects to the same and confirm that the guarantee in Clause 16 of the Loan Agreement shall remain in full force and effect and shall continue to stand as security for the Guaranteed Obligations stated therein.

SCORPIO TANKERS INC., as Guarantor

By:       /s/ Brian M. Lee                  

Name: Brian M. Lee

Title: Chief Financial Officer

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EX-4.10

Execution Version

Dated: as of December 30, 2011

STI SPIRIT SHIPPING COMPANY LIMITED

as Borrower

SCORPIO TANKERS INC.

as Guarantor

DVB BANK SE

as Lender

– and –

DVB BANK SE

as Arranger, Agent

and as Security Trustee

_______________________________________________________

FIRST AMENDATORY AGREEMENT

______________________________________________________

Amending and Supplementing the Loan Agreement dated as of March 9, 2011, as amended

by a Letter Agreement dated September 28, 2011

FIRST AMENDATORY AGREEMENT dated as of December 30, 2011 (this “First Amendatory Agreement”)

AMONG

(1)	STI SPIRIT SHIPPING COMPANY LIMITED, a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as borrower (the “Borrower”);
(2)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as guarantor (the “Guarantor”);
(3)	DVB BANK SE as lender (the “Lender”, which expression includes its successors, transferees and assigns);
(4)	DVB BANK SE, acting in such capacity through its London Branch at 80 Cheapside, London EC2V 6EE, England, as agent for the Lender (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(5)	DVB BANK SE, acting in such capacity through its London Branch at 80 Cheapside, London EC2V 6EE, England, as security trustee for the Lender (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(6)	DVB BANK SE, acting in such capacity through its office at Platz der Republik 6, 60325 Frankfurt am Main, Germany, as arranger (in such capacity, the “Arranger”, which expression includes its successors, transferees and assigns).

WITNESSETH THAT:

WHEREAS, the Borrower, the Guarantor, the Lender, the Agent, the Security Trustee and the Arranger are parties to a Loan Agreement dated as of March 9, 2011 (as amended by a Letter Agreement dated September 28, 2011, the “Loan Agreement”).

WHEREAS, upon the terms and conditions stated herein, the parties hereto have agreed pursuant to Clause 28 of the Loan Agreement to (a) amend the definition of “Consolidated Liquidity”, (b) waive compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement during the Waiver Period (as defined below), and (c) amend Clause 12.4 with effect on and after October 1, 2013.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1	DEFINITIONS
1.1	Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Loan Agreement. In addition:

	“Waiver Period” means the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on the earliest to occur of (a) September 30, 2013 at 11:59:59 p.m. New York City time and (b) the occurrence after the commencement of the Waiver Period of any Event of Default, including, without limitation, any failure to comply with the provisions of this First Amendatory Agreement.
2	AMENDMENTS TO THE LOAN AGREEMENT; WAIVERS OF COVENANTS
2.1	Amendments.
(a)	Subject to Clause 3 below, the definition of “Consolidated Liquidity” in the Loan Agreement is amended and restated to read as follows:
	““Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash, (b) Cash Equivalents and (c) the Total Available Commitment (as defined under the Amended and Restated Loan Agreement dated as of July 6, 2011 among, inter alios, (i) the Guarantor as borrower, (ii) the subsidiaries of the Guarantor named therein as joint and several guarantors, (iii) the banks and financial institutions named therein as lenders, (iv) the banks and financial institutions named therein as swap banks, (v) Nordea Bank Finland plc, New York Branch, as agent, (vi) Nordea Bank Finland plc, New York Branch, as security trustee and (vii) Nordea Bank Finland plc, New York Branch, DnB NOR Bank ASA and ABN AMRO Bank as lead arrangers (as amended, supplemented, modified and/or restated from time to time)), in each case held by the Guarantor on a freely available and unencumbered basis;”
(b)	Subject to Clause 3 below, Clause 12.4 is amended and restated to read as follows on and after October 1, 2013:

“12.4 Minimum interest coverage. Commencing on October 1, 2013 at 12:00 a.m. New York City time, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

2.2

Waivers. Subject to Clause 3 below, the Creditor Parties agree to waive compliance by the Guarantor during the Waiver Period with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (the “Specified Waivers”), provided that at all times during the Waiver Period, the Guarantor (i) shall not declare or pay any dividends unless the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is equal to or exceeds 2.00 to 1.00, and (ii) shall be in compliance with the following covenants (and for the avoidance of doubt the Guarantor’s compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (as amended hereby in the case of Clause 12.4) shall be reinstated immediately upon the expiration of the Waiver Period and shall be required at all times thereafter):

(a)

Minimum interest coverage.

(i) During the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on December 31, 2012 at 11:59:59 p.m. New York City time, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.25 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;

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(ii)	During the period commencing on January 1, 2013 at 12:00 a.m. New York City time and ending on March 31, 2013 at 11:59:59 p.m. New York City time, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.50 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(iii)	During the period commencing on April 1, 2013 at 12:00 a.m. New York City time and ending on June 30, 2013 at 11:59:59 p.m. New York City time, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.75 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(iv)	During the period commencing on July 1, 2013 at 12:00 a.m. New York City time and ending on September 30, 2013 at 11:59:59 p.m. New York City time, the Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis.

(b)	Free liquidity. The Guarantor shall maintain Consolidated Liquidity, including all amounts on deposit with any bank, of not less than $25,000,000 until the Guarantor owns directly or indirectly a fleet of 15 vessels. When the Guarantor owns directly or indirectly a fleet of 15 vessels, the Guarantor shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $25,000,000 plus $750,000 per each additional vessel that the Guarantor directly or indirectly owns over 15 vessels. At all times during the Waiver Period, the Consolidated Liquidity shall consist of not less than $15,000,000 in cash and Cash Equivalents.
3	CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
3.1	Conditions precedent and subsequent. The effectiveness of this First Amendatory Agreement shall be subject to the completion, to the satisfaction of the Agent, of the following conditions precedent and subsequent:
(a)	On or before 5:00 p.m. New York City time on December 30, 2011 (in the case of subparagraphs (i) and (ii) below) and January 10, 2012 (in the case of subparagraph (iii), (iv) and (v) below) (each, a “Conditions Precedent Deadline”), the Agent shall have received:

(i)	a copy (with the original to follow) of this First Amendatory Agreement, duly executed by the parties hereto;
(ii)	copies of certificates dated as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline, certifying that each of the Borrower and the Guarantor is duly incorporated or formed and in good standing under the laws of its jurisdiction of incorporation or formation;

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(iii)	copies of resolutions of the directors of each of the Borrower and the Guarantor authorizing the execution of this First Amendatory Agreement and all other documents required hereby to which the Borrower or the Guarantor is to be a party, in each case certified as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline by an officer of such party as being a true and correct copy thereof;
(iv)	a copy (with the original to follow) of any power of attorney under which this First Amendatory Agreement and of all other documents required hereby is to be executed on behalf of the Borrower or the Guarantor; and
(v)	an amendment fee equal to 0.25% of the Loan as of the date of this First Amendatory Agreement.

(b)	On or before 5:00 p.m. New York City time on January 20, 2012 (the “Conditions Subsequent Deadline”), the Agent shall have received favorable legal opinions from lawyers appointed by the Borrower on such matters concerning the laws of such relevant jurisdictions as the Agent may require.
3.2	Waiver of conditions precedent or subsequent. The Agent, with the consent of the Lenders, may waive one or more of the conditions referred to in Clause 3.1(a) or 3.1(b) provided that the Borrower delivers to the Agent a written undertaking to satisfy such conditions within ten (10) Business Days (or such longer period as the Agent may specify) after the Agent grants such waiver.
3.3	Failure to complete conditions precedent or subsequent. If the Borrower and the Guarantor fail to complete all or any of the conditions required by Clause 3.1(a) by the applicable Conditions Precedent Deadline or Clause 3.1(b) by the Conditions Subsequent Deadline, the Borrower and the Guarantor acknowledge and agree that the amendments made in Clause 2.1 hereof and the Specified Waivers made in Clause 2.2 hereof shall be null, void and of no effect whatsoever and that the Creditor Parties shall be entitled to all rights and to exercise all remedies afforded to them under the terms of the Loan Agreement (all of which are expressly reserved) as if (a) such amendments had not been made and (b) the Specified Waivers had not been granted by this First Amendatory Agreement.
4	EFFECT OF AMENDMENTS
4.1	References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Loan Agreement as amended hereby.
4.2	Effect of amendments. Subject to the terms of this First Amendatory Agreement, with effect on and from the date hereof (subject to fulfillment or waiver of the conditions precedent and conditions subsequent stated in Clause 3 above) the Loan Agreement shall be, and shall be deemed by this First Amendatory Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents shall be, and shall be deemed by this First Amendatory Agreement to have been, amended as follows:

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(a)	the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended or supplemented by this First Amendatory Agreement; and
(b)	by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this First Amendatory Agreement.
4.3	No other amendments; ratification.
(a)	Except as amended hereby, all other terms and conditions of the Loan Agreement and the other Finance Documents remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.
(b)	Without limiting the foregoing, the Guarantor acknowledges and agrees that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
(c)	The Borrower and the Guarantor acknowledge and agree that the Loan Agreement shall, together with this First Amendatory Agreement, be read and construed as a single agreement.
5	REPRESENTATIONS AND WARRANTIES
5.1	Authority. The execution and delivery by each of the Borrower and the Guarantor of this First Amendatory Agreement and the performance by each of the Borrower and the Guarantor of all of its agreements and obligations under the Loan Agreement, as amended or temporarily waived hereby, are within such Security Party’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Security Party, and no consent of any third party is required in connection with the transactions contemplated by this First Amendatory Agreement.
5.2	Enforceability. This First Amendatory Agreement and the Loan Agreement, as amended hereby, constitute the legal, valid and binding obligations of each of the parties hereto and are enforceable against such parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought.
5.3	Certifications. Each of the Borrower and the Guarantor certifies that:
(a)	there is no proceeding for the dissolution or liquidation of such party;
(b)	the representations and warranties contained in the Loan Agreement, as amended hereby, are true and correct as though made on and as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;

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(c)	there is no material misstatement of fact in any information provided by each of the Borrower and the Guarantor to the Agent or the Lender since March 9, 2011, and such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d)	there is no event occurring and continuing, or resulting from this First Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(e)	there have been no amendments to the constitutional documents of any Security Party since March 9, 2011.
6	MISCELLANEOUS
6.1	Governing law. THIS FIRST AMENDATORY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401).
6.2	Counterparts. This First Amendatory Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
6.3	Severability. Any provision of this First Amendatory Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.
6.4	Payment of expenses. The Borrower agrees to pay or reimburse each of the Creditor Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this First Amendatory Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Creditor Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Creditor Parties in connection with the foregoing.
6.5	Headings and captions. The headings captions in this First Amendatory Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

[SIGNATURE PAGE FOLLOWS]

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WHEREFORE, the parties hereto have caused this First Amendatory Agreement to be executed as of the date first above written.

STI SPIRIT SHIPPING COMPANY LIMITED, as Borrower By:    /s/ Brian M. Lee                                 Brian Attorney-in-Fact	DVB BANK SE, as Lender By:      /s/ C. Gregory Chase                                 C. Gregory Chase Attorney-in-Fact
SCORPIO TANKERS INC., as Guarantor By:    /s/ Brian M. Lee                                 Brian M. Lee Chief Financial Officer	DVB BANK SE, as Arranger, Agent and Security Trustee By:      /s/ C. Gregory Chase                                 C. Gregory Chase Attorney-in-Fact

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EX-4.11

Execution Version

Date: as of May 3, 2011

SCORPIO TANKERS INC.

as Borrower

STI CORAL SHIPPING COMPANY LIMITED

and STI DIAMOND SHIPPING COMPANY LIMITED

as Joint and Several Guarantors

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 2

as Swap Banks

NORDEA BANK FINLAND PLC, NEW YORK BRANCH

as Agent

and as Security Trustee

– and –

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lead Arrangers

LOAN AGREEMENT

relating to a Senior Term Loan Facility

in the Initial Principal Amount of up to US$150,000,000

INDEX

Clause		Page
1	INTERPRETATION	2
2	FACILITY	26
3	POSITION OF THE LENDERS and swap banks	26
4	DRAWDOWN	28
5	INTEREST	30
6	INTEREST PERIODS	31
7	DEFAULT INTEREST	32
8	REPAYMENT AND PREPAYMENT	33
9	CONDITIONS PRECEDENT	37
10	REPRESENTATIONS AND WARRANTIES	39
11	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS	46
12	FINANCIAL COVENANTS	54
13	MARINE INSURANCE COVENANTS	54
14	SHIP COVENANTS	60
15	COLLATERAL MAINTENANCE RATIO	64
16	GUARANTEE	66
17	PAYMENTS AND CALCULATIONS	69
18	APPLICATION OF RECEIPTS	71
19	APPLICATION OF EARNINGS, SALE PROCEEDS AND INSURANCE PROCEEDS	73
20	EVENTS OF DEFAULT	74
21	FEES AND EXPENSES	78
22	INDEMNITIES	79
23	NO SET-OFF OR TAX DEDUCTION	81
24	ILLEGALITY, ETC	83

INDEX

Clause		Page
25	INCREASED COSTS	84
26	SET-OFF	86
27	TRANSFERS AND CHANGES IN LENDING OFFICES	86
28	VARIATIONS AND WAIVERS	90
29	NOTICES	91
30	SUPPLEMENTAL	93
31	THE SERVICING BANKS	94
32	LAW AND JURISDICTION	98
33	WAIVER OF JURY TRIAL	99
34	PATRIOT ACT notice	100

EXECUTION PAGE	101
SCHEDULE 1  LENDERS AND COMMITMENTS	102
SCHEDULE 2  SWAP BANKS	103
SCHEDULE 3  DRAWDOWN NOTICE	104
SCHEDULE 4  CONDITION PRECEDENT DOCUMENTS	106
SCHEDULE 5  TRANSFER CERTIFICATE	116
SCHEDULE 6  DESIGNATION NOTICE	120
SCHEDULE 7  list of approved brokers	121
SCHEDULE 8  form of guarantor accession agreement	122
SCHEDULE 9  FORM OF lender accession agreement	124
SCHEDULE 10  FORM OF swap bank accession agreement	128
appendix A  FORM OF CHARTER ASSIGNMENT	132
appendix b  FORM OF COMPLIANCE CERTIFICATE	141
appendix c  FORM OF EARNINGS ACCOUNT PLEDGE	146
appendix d  FORM OF EARNINGS ASSIGNMENT	154

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INDEX

Clause	Page
appendix e  FORM OF INSURANCE ASSIGNMENT	160
appendix f  FORM OF MANAGER’S UNDERTAKING	167
appendix g  FORM OF MARSHALL ISLANDS SHIP MORTGAGE	176
appendix h  FORM OF NOTE	190
appendix i  FORM OF RETENTION ACCOUNT PLEDGE	194
appendix j  FORM OF SHAREs PLEDGE	202

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THIS LOAN AGREEMENT (this “Agreement”) is made as of May 3, 2011

AMONG

(1)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as borrower (the “Borrower”);
(2)	STI CORAL SHIPPING COMPANY LIMITED and STI DIAMOND SHIPPING COMPANY LIMITED, each a corporation incorporated and existing under the laws of the Republic of The Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several guarantors (together with any other person that becomes a guarantor party hereto pursuant to a Guarantor Accession Agreement (as defined below), the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (together with any other person that becomes a lender party hereto pursuant to a Lender Accession Agreement (as defined below), the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as swap banks (together with any other person that becomes a swap bank party hereto pursuant to a Swap Bank Accession Agreement (as defined below), the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(6)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as security trustee for the Lenders and the Swap Banks (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(7)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lead arrangers (the “Lead Arrangers”, which expression includes their respective successors, transferees and assigns).

BACKGROUND

(A) The Lenders have agreed to make available to the Borrower a senior term loan facility in the aggregate principal amount of up to the amount of the Total Commitments for the purpose of financing the lesser of 50% of the Fair Market Value of each Ship and 50% of the purchase price of each Ship.

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(B)	At their discretion, the Swap Banks may make available to the Borrower interest rate swap transactions from time to time to hedge the Borrower’s exposure under this Agreement to interest rate fluctuations.
(C)	The Lenders and the Swap Banks have agreed to share in the security to be granted to the Security Trustee pursuant to this Agreement with the interest of the Swap Banks being secured on a subordinated basis.

IT IS AGREED as follows:

1	INTERPRETATION
1.1	Definitions. Subject to Clause 1.5, in this Agreement:
	“Acceptable Accounting Firm” means Deloitte LLP, or such other recognized accounting firm as the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld or delayed), approve from time to time in writing;
	“Account Bank” means ABN AMRO Bank N.V., acting through its office at Coolsingel 93, P.O. Box 749, 3000 AS Rotterdam, The Netherlands;
	“Additional Ship” means any vessel which:

(a)	is either a clean or crude oil double-hull tanker;
(b)	with a deadweight tonnage between 35,000 dwt and 200,000 dwt;
(c)	no older than seven (7) years of age on its Delivery Date;
(d)	is classed with a Classification Society, free of overdue recommendations and conditions affecting that vessel’s class; and
(e)	was built by a shipyard approved by the Majority Lenders;

“Advance” means the principal amount of each borrowing by the Borrower under this Agreement;

“Affiliate” means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise;

“Agreed Form” means in relation to any document, that document in the form approved by the Agent with the consent of the Majority Lenders, or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;

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“Approved Broker” means any of the companies listed on Schedule 7 or such other company proposed by the Borrower which the Agent may approve from time to time for the purpose of valuing a Ship, who shall act as an expert and not as arbitrator and whose valuation shall be conclusive and binding on all parties to this Agreement;

“Approved Flag” means the Bahamian, Cypriot, Maltese, Marshall Islands, Liberian, Panamanian or Singaporean flag or such other flag as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Ship shall be registered;

“Approved Management Agreement” means, in relation to a Ship in respect of its commercial and technical management, a management agreement which the Agent may reasonably approve and which shall be on the BIMCO Shipman 98 form or such other form of management agreement, in each case between the Borrower or the Guarantor that owns a Ship and each Approved Manager;

“Approved Manager” means each of SSM, SCM, V. Ships Ship Management and Columbia Shipmanagement Ltd. or any other company proposed by the Borrower which the Agent may reasonably approve from time to time as the technical and/or commercial manager of a Ship;

“Availability Period” means the period commencing on the Effective Date and ending on:

(a)	the date which is 12 months after the Effective Date (or such later date as the Agent may, with the consent of the Majority Lenders, agree with the Borrower); or
(b)	if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Bank Secrecy Act” has the meaning given in Clause 10.21;

“Basel III” means any of the changes designed to strengthen any capital standards or introduce minimum liquidity or other requirements referenced in the publication of the Groups of Governors and Heads of Supervision of the Basel Committee on Banking Supervision (the “Basel Committee”) dated 16 December, 2010, or any subsequent paper or document published by the Basel Committee on any of those requirements;

“Business Day” means a day on which banks are open in London and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City and Amsterdam, The Netherlands;

“Capitalized Lease” means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with IFRS, is required to be capitalized on the balance sheet of such person; and “Capitalized Lease Obligation” is defined to mean the rental obligations, as aforesaid, under a Capitalized Lease;

“Cash Equivalents” means:

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(a)	securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)	time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)	such other securities or instruments as the Majority Lenders shall agree in writing;

and in respect of both (a) and (b) above, with a Rating Category of at least “A+” by S&P and “A” by Moody’s (or the equivalent used by another Rating Agency) in each case having maturities of not more than ninety (90) days from the date of acquisition;

“Change of Control” means, in respect of the Borrower:

(a)

a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than any holders of the Borrower’s Equity Interests as of the date of this Agreement, becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act and including by reason of any change in the ultimate “beneficial ownership” of the Equity Interests of the Borrower) of more than 35% of the total voting power of the Voting Stock of the Borrower (calculated on a fully diluted basis); or

(b)

individuals who at the beginning of any period of two consecutive calendar years constituted the Board of Directors or equivalent governing body of the Borrower (together with any new directors (or equivalent) whose election by such Board of Directors or equivalent governing body or whose nomination for election was approved by a vote of at least two-thirds of the members of such Board of Directors or equivalent governing body then still in office who either were members of such Board of Directors or equivalent governing body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least 50% of the members of such Board of Directors or equivalent governing body then in office;

“Charter” means, in relation to a Ship, a time or consecutive voyage charter in respect of such Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

“Charter Assignment” means, in relation to a Ship, an assignment of the Charter for such Ship, in the form set out in Appendix A;

“CISADA” means the United States Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010;

“Classification Society” means, in relation to a Ship, American Bureau of Shipping, Det Norske Veritas, Korean Register of Shipping or such other first-class vessel classification society that is a member of the International Association of Classification Societies that the Agent may approve from time to time;

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“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Collateral” means all property (including, without limitation, any proceeds thereof) referred to in the Finance Documents that is subject to any Security Interest in favor of the Security Trustee, for the benefit of the Lenders and the Swap Banks, securing the Secured Liabilities;

“Collateral Maintenance Ratio” has the meaning given in Clause 15.2;

“Commission” or “SEC” means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act;

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate or Lender Accession Agreement, as that amount may be increased, reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Compliance Certificate” means a certificate executed by an authorized person of the Borrower, in the form set out in Appendix B;

“Confirmation” and “Early Termination Date”, in relation to any continuing Designated Transaction, have the meanings given in the relevant Master Agreement;

“Consolidated EBITDA” means, for any accounting period, the consolidated net income of the Borrower for that accounting period:

(a) plus, to the extent deducted in computing the net income of the Borrower for that accounting period, the sum, without duplication, of:

(i)	all federal, state, local and foreign income taxes and tax distributions;
(ii)	Consolidated Net Interest Expense;
(iii)	depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)	expenses incurred in connection with a special or intermediate survey of a Ship during such period; and
(v)	any drydocking expenses;

(b) minus, to the extent added in computing the consolidated net income of the Borrower for that accounting period, (i) any non-cash income or non-cash gains and (ii) any extraordinary gains on asset sales not incurred in the ordinary course of business;

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“Consolidated Funded Debt” means, for any accounting period, the sum of the following for the Borrower determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:

(a)	all Financial Indebtedness; and
(b)	all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet);

provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt;

“Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents, in each case held by the Borrower on a freely available and unencumbered basis;

“Consolidated Net Interest Expense” means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Borrower and all of its subsidiaries during the relevant accounting period less (i) interest income received and (ii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Borrower;

“Consolidated Tangible Net Worth” means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Borrower, minus goodwill;

“Consolidated Total Capitalization” means Consolidated Tangible Net Worth plus Consolidated Funded Debt;

“Contractual Currency” has the meaning given in Clause 22.4;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Security Trustee, any Lender, any Swap Bank or any Lead Arranger, whether as at the date of this Agreement or at any later time;

“Deed of Covenant” means a deed of covenant in Agreed Form collateral to a Mortgage that is in statutory form;

“Delivery Date” has the meaning given in Clause 9.2(b);

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a) it is entered into by the Borrower pursuant to a Master Agreement with a Swap Bank;

(b)	its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Maturity Date; and
(c)	it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 6, as a Designated Transaction for the purposes of the Finance Documents;

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“Disbursement Authorization” has the meaning given in Clause 9.2(b);

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrower for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Guarantor owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) except to the extent that they fall within paragraph (b):

(i)	all freight, hire and passage moneys;
(ii)	compensation payable to the Guarantor owning that Ship or the Security Trustee in the event of requisition of that Ship for hire;
(iii)	remuneration for salvage and towage services;
(iv)	demurrage and detention moneys;
(v)	damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
(vi)	all moneys which are at any time payable under Insurances in respect of loss of hire; and

(b) if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;

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“Earnings Account” means, in relation to a Ship, an account in the name of the Guarantor owning such Ship with the Account Bank and designated as the “Earnings Account” for such Ship, or any other account (with the Account Bank or the Agent or with another bank or financial institution acceptable to the Agent) which is designated as the Earnings Account in relation to that Ship for the purposes of this Agreement;

“Earnings Account Pledge” means a pledge of an Earnings Account, in the form set out in Appendix C;

“Earnings Assignment” means an assignment of the Earnings and any Requisition Compensation of a Ship, in the form set out in Appendix D;

“EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system maintained by the SEC;

“Effective Date” means the date on which this Agreement is executed and delivered by the parties hereto;

“Email” has the meaning given in Clause 29.1;

“Environmental Claim” means:

(a)	any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
(b)	any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a)	any release of Environmentally Sensitive Material from a Ship; or
(b)	any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision or allision between a Ship and such other vessel or object or some other incident of navigation or operation, in either case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Borrower and/or the Guarantor owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)	any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Borrower and/or the Guarantor owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

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“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Equity Interests” of any person means:

(a)	any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)	all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person;

“Equity Proceeds” means the net cash proceeds from the issuance of common or preferred stock of the Borrower;

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder;

“ERISA Affiliate” means a trade or business (whether or not incorporated) that, together with the Borrower or any subsidiary of it, would be deemed to be a single employer under Section 414 of the Code;

“ERISA Funding Event” means:

(a)	any failure by any Plan to satisfy the minimum funding standards (for purposes of Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(b)	the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(c)	the failure by the Borrower or any subsidiary of it or any ERISA Affiliate to make any required contribution to a Multiemployer Plan;
(d)	a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code);
(e)	the incurrence by the Borrower or any subsidiary of it or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or

(f) a determination that a Multiemployer Plan is, or is expected to be, in endangered status within the meaning of Section 432 of the Code or Section 305 of ERISA;

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“ERISA Termination Event” means:

(a)	the imposition of any lien in favor of the PBGC of any Plan or Multiemployer Plan;
(b)	the receipt by the Borrower or any subsidiary of it or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA;
(c)	the receipt by the Borrower or any subsidiary of it or ERISA Affiliate of any notice that a Multiemployer Plan is in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA;
(d)	the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA; or
(e)	the occurrence of any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan;

“Estate” has the meaning assigned such term in Clause 31.1(b)(ii);

“Event of Default” means any of the events or circumstances described in Clause 20.1;

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Executive Order” means an executive order issued by the President of the United States of America;

“Fair Market Value” means, in relation to each Ship, the market value of such Ship at any date that is shown by the average of two (2) valuations each prepared and addressed to the Agent:

(a)	as at a date not more than 30 days prior to the date such valuation is delivered to the Agent;
(b)	by an Approved Broker;
(c)	with or without physical inspection of that Ship (as the Agent may require); and
(d)	on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (and with no value to be given to any pooling arrangements);

“Fee Letter” means the letter dated May 3, 2011 from the Lead Arrangers to the Borrower;

“Finance Documents” means:

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(a)	this Agreement;
(b)	all Charter Assignments;
(c)	all Earnings Account Pledges;
(d)	all Earnings Assignments;
(e)	all Insurance Assignments;
(f)	all Mortgages and, if applicable, the Deed of Covenant collateral thereto;
(g)	the Note;
(h)	the Retention Account Pledge;
(i)	all Shares Pledges; and
(j)	any other document (whether creating a Security Interest or not) which is executed at any time by any person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders and/or the Swap Banks under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, with respect to any person (the “debtor”) at any date of determination (without duplication):

(a)	all obligations of the debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
(b)	all obligations of the debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)	all obligations of the debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the debtor (including reimbursement obligations with respect thereto);
(d)	all obligations of the debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)	all Capitalized Lease Obligations of the debtor as lessee;

(f)	all Financial Indebtedness of persons other than the debtor secured by a Security Interest on any asset of the debtor, whether or not such Financial Indebtedness is assumed by the debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness; and
(g)	all Financial Indebtedness of persons other than the debtor under any guarantee, indemnity or similar obligation entered into by the debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the debtor.

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The amount of Financial Indebtedness of any debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time as determined in conformity with IFRS, and (ii) Financial Indebtedness shall not include any liability for federal, state, local, foreign or other taxes;

“Fiscal Year” means, in relation to any person, each period of one (1) year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared;

“Guaranteed Obligations” has the meaning given in Clause 16.1;

“Guarantor Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Guarantor in the form set out in Schedule 8 hereto;

“IFRS” means International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);

“Initial Ships” means, collectively, the STI CORAL and STI DIAMOND;

“Insurances” means in relation to a Ship:

(a)	all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, the Earnings or otherwise in relation to that Ship; and
(b)	all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Insurance Assignment” means, in relation to a Ship, an assignment of the Insurances, in the form set out in Appendix E;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISM Code Documentation” includes, in respect of a Ship:

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(a)	the Document of Compliance and Safety Management Certificate issued pursuant to the ISM Code in relation to that Ship within the periods specified by the ISM Code;
(b)	all other documents and data which are relevant to the safety management system and its implementation and verification which the Agent may require; and
(c)	any other documents which are prepared or which are otherwise relevant to establish and maintain that Ship’s compliance or the compliance of the Guarantor that owns that Ship or the relevant Approved Manager with the ISM Code which the Agent may require;

“ISPS Code” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time;

“ISPS Code Documentation” includes:

(a)	the ISSC; and
(b)	all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Lender Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Lender in the form set out in Schedule 9 hereto;

“Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” under its name on Schedule 1 or in the relevant Transfer Certificate or other instrument pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent;

“LIBOR” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:

(a)	the applicable Screen Rate; or
(b)	if no Screen Rate is available for that period, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards to four (4) decimal places) of the rates, as supplied to the Agent at its request, quoted by each Reference Bank to leading banks in the London Interbank Market;

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as of 11:00 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period;

“Loan” means the principal amount from time to time outstanding under this Agreement;

“Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency;

“Majority Lenders” means:

(a)	before the Loan has been made, Lenders whose Commitments total 66.66% of the Total Commitments; and
(b)	after the Loan has been made, Lenders whose Contributions total 66.66% of the Loan;

“Manager’s Undertaking” means, in relation to a Ship, the letter executed and delivered by each Approved Manager, in the form set out in Appendix F;

“Margin” means:

(a)	2.75% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than 45%;
(b)	3.00% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is equal to or greater than 45% and less than or equal to 50%; and
(c)	3.25% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;

provided that the ratio of Consolidated Funded Debt to Consolidated Total Capitalization in (a) or (b) may be exceeded for a period of not more than one calendar quarter without an increase to the next tier of the Margin but should the ratio of Consolidated Funded Debt to Consolidated Total Capitalization in (a) or (b) above not be restored within such calendar quarter then on the first day of the next succeeding calendar quarter the Margin shall be increased to the next tier and such increased Margin shall also be applied retroactively to the preceding calendar quarter;

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve System and any successor regulations thereto, as in effect from time to time;

“Master Agreement” means each master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) in Agreed Form made between the Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

“Maturity Date” means the sixth anniversary of the Effective Date;

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“MOA” means, in respect of the sale and purchase of a Ship, a Memorandum of Agreement entered into between the Seller of such Ship and a Guarantor;

“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors;

“Mortgage” means, in relation to a Ship, the first priority or preferred ship mortgage on that Ship, in Agreed Form; provided that a mortgage in respect of a Ship registered on Marshall Islands flag shall be in the form set out in Appendix G;

“Multiemployer Plan” means, at any time, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any subsidiary of it or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;

“Net Debt” means Consolidated Funded Debt less cash and Cash Equivalents;

“Non-Consenting Lender” has the meaning given in Clause 3.5(c);

“Non-indemnified Tax” means any tax on the net income of a Creditor Party (but not a tax on gross income or individual items of income), whether collected by deduction or withholding or otherwise, which is levied by a taxing jurisdiction which:

(a)	is located in the country under whose laws such entity is formed (or in the case of a natural person is a country of which such person is a citizen); or
(b)	with respect to any Lender, is located in the country of its Lending Office; or
(c)	with respect to any Creditor Party other than a Lender, is located in the country from which such party has originated its participation in this transaction;

“Note” means a promissory note of the Borrower, payable to the order of the Agent, evidencing the aggregate indebtedness of the Borrower under this Agreement, in the form set out in Appendix H;

“Notifying Lender” has the meaning given in Clause 24.1 or Clause 25.1 as the context requires;

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury;

“pari passu”, when used with respect to the ranking of any Financial Indebtedness of any person in relation to other Financial Indebtedness of such person, means that each such Financial Indebtedness:

(a) either (i) is not subordinated in right of payment to any other Financial Indebtedness of such person or (ii) is subordinate in right of payment to the same Financial Indebtedness of such person as is the other and is so subordinate to the same extent;  and

(b) is not subordinate in right of payment to the other or to any Financial Indebtedness of such person as to which the other is not so subordinate;

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“PATRIOT Act” has the meaning given in Clause 9.1;

“Payment Currency” has the meaning given in Clause 22.4;

“PBGC” means the Pension Benefits Guarantee Corporation and its successors;

“Permitted Security Interests” means:

(a)	Security Interests created by the Finance Documents;
(b)	pledges of certificates of deposit or other cash collateral securing any Security Party’s reimbursement obligations in connection with letters of credit now or hereafter issued for the account of such Security Party in connection with the establishment of the financial responsibility of such Security Party under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the case may be, as the same may be amended or replaced;
(c)	Security Interests to secure obligations under workmen’s compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen’s or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which the Borrower or a Guarantor is the principal, as to all of the foregoing, only to the extent arising and continuing in the ordinary course of business;
(d)	Security Interests for loss, damage or expense which are fully covered by insurance, subject to applicable deductibles satisfactory to the Mortgagee;
(e)	Security Interests for unpaid master’s and crew’s wages in accordance with usual maritime practice;
(f)	Security Interests for salvage;
(g)	Security Interests arising by operation of law for not more than two (2) months’ prepaid hire under any charter or other contract of employment in relation to the Ship not prohibited by this Agreement or any other Finance Document;
(h)	Security Interests for master’s disbursements incurred in the ordinary course of trading and any other Security Interests arising by operation of law or otherwise in the ordinary course of its business, provided such Security Interests do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower or the Guarantor that owns such Ship in good faith by appropriate steps) and subject, in the case of Security Interests for repair or maintenance, to Clause 14.13(g);
(i)	any Security Interest created in favor of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the relevant Security Party is actively prosecuting or defending such proceedings or arbitration in good faith and such Security Interest does not (and is not likely to) result in any sale, forfeiture or loss of the Ship;

(j)	Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; and
(k)	other liens, charges and encumbrances incidental to the conduct of the business of each such party, the ownership of any such party’s property and assets and which do not in the aggregate materially detract from the value of each such party’s property or assets or materially impair the use thereof in the operation of its business;

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“Pertinent Document” means:

(a)	any Finance Document;
(b)	any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;
(c)	any other document contemplated by or referred to in any Finance Document; and
(d)	any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a)	the jurisdiction under the laws of which the company is incorporated or formed;
(b)	a jurisdiction in which the company has the center of its main interests or in which the company’s central management and control is or has recently been exercised;
(c)	a jurisdiction in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
(d)	a jurisdiction in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and
(e)	a jurisdiction the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company whether as a main or territorial or ancillary proceedings or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (a) or (b) above;

“Pertinent Matter” means:

(a)	any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or
(b)	any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

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and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Plan” means any employee benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which the Borrower or any subsidiary of it or ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice and/or, the lapse of time, would constitute an Event of Default;

“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed;

“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is two (2) Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);

“Rating Agencies” means:

(a)	S&P and Moody’s; or
(b)	if S&P or Moody’s or both of them are not making ratings of securities publicly available, a nationally recognized United States rating agency or agencies, as the case may be, selected by the Agent with the consent of the Majority Lenders, which will be substituted for S&P or Moody’s or both, as the case may be;

“Rating Category” means:

(a)	with respect to S&P, any of the following categories (any of which may include a “+” or “-”):  AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);
(b)	with respect to Moody’s, any of the following categories:  Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(c)	the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable;

“Reference Banks” means the reference banks chosen from time to time by the British Bankers’ Association;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Replacement Ship” has the meaning given in Clause 8.8(b);

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“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsections 22, 23, 25, 27, or 28 of PBGC Regulation Section 4043;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Retention Account” means an account in the name of the Borrower with the Agent in New York designated “Scorpio Tankers - Retention Account”, or any other account (with that or another office of the Agent or with another bank or financial institution acceptable to the Agent) which is designated as the Retention Account for the purposes of this Agreement;

“Retention Account Pledge” means a pledge of the Retention Account, in the form set out in Appendix I;

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies Inc., and its successors;

“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

(a)	imposed by law or regulation of the Council of the European Union, the United Nations or its Security Council;
(b)	under CISADA;
(c)	in respect of (i) a “national” of any “designated foreign country”, within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the United States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as amended, or (ii) a “specially designated national” listed by OFAC or any regulations or rulings issued thereunder; or
(d)	otherwise imposed by any law or regulation or Executive Order by which any Creditor Party, the Borrower or any Guarantor is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Creditor Party, the Borrower or any Guarantor, including without limitation laws or regulations or Executive Orders restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there;

provided that the laws and regulations described in paragraphs (a) and (d) shall be applicable only to the extent such laws and regulations are not inconsistent with the laws and regulations of the United States of America;

“SCM” means Scorpio Commercial Management S.A.M., a Monaco company, as commercial manager of the Ships;

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“Screen Rate” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the British Bankers’ Association Interest Settlement Rate for the relevant currency and period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Majority Lenders;

“Secured Liabilities” means all liabilities which the Borrower, the other Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Securities Act” means the United States Securities Act of 1933, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Security Interest” means:

(a)	a mortgage, encumbrance, charge (whether fixed or floating) or pledge, any maritime or other lien, privilege or any other security interest of any kind;
(b)	the security rights of a plaintiff under an action in rem; and
(c)	any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Borrower, each Guarantor and any other person (except a Creditor Party) who, as a surety, guarantor mortgagor, assignor or pledgor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a Finance Document;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which:

(a)	all amounts which have become due for payment by the Borrower or any other Security Party under the Finance Documents and the Master Agreements have been paid;
(b)	no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or any Master Agreement; and
(c)	neither the Borrower nor any other Security Party has any liability under Clause 21, 22 or 23 or any other provision of this Agreement or another Finance Document or a Master Agreement;

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“Seller” means, in respect of an MOA, the seller of Ship named therein;

“Seller’s Bank” has the meaning given in Clause 9.2(b);

“Servicing Bank” means, as the context may require, the Agent or the Security Trustee;

“Shares Pledge” means a pledge of the Equity Interests of each Guarantor, in the form set out in Appendix J;

“Ship” means, as the context may require:

(a)	any Initial Ship;
(b)	any Additional Ship;
(c)	any Replacement Ship; and
(d)	any Substitute Collateral Ship;

“SSM” means Scorpio Ship Management S.A.M., a Monaco company, as technical manager of the Ships;

“STI CORAL” means the 2008-built, double hull oil / chemical tanker of 29,955 gross tons and 13,607 net tons to be registered in the ownership of STI Coral Shipping Company Limited under Marshall Islands flag with the name “STI CORAL”, Official Number 4346 and IMO Number 9397456;

“STI DIAMOND” means the 2008-built, double hull oil / chemical tanker of 29,955 gross tons and 13,607 net tons to be registered in the ownership of STI Diamond Shipping Company Limited under Marshall Islands flag with the name “STI DIAMOND”, Official Number 4347 and IMO Number 9397468;

“Substitute Collateral Ship” has the meaning given in clause 8.9(b);

“Swap Bank Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Swap Bank in the form set out in Schedule 10 hereto;

“Swap Counterparty” means, at any relevant time and in relation to a continuing Designated Transaction, the Swap Bank which is a party to that Designated Transaction;

“Swap Exposure” means, as at any relevant date and in relation to a Swap Counterparty, the amount certified by the Swap Counterparty to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Counterparty under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement entered into by the Swap Counterparty with the Borrower if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Counterparty;

“Total Loss” means in relation to a Ship:

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(a)	actual, constructive, compromised, agreed or arranged total loss of that Ship;
(b)	any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, unless it is within one (1) month redelivered to the full control of the Guarantor owning that Ship; or
(c)	any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless it is within one (1) month redelivered to the full control of the Guarantor owning that Ship;

“Total Loss Date” means in relation to a Ship:

(a)	in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)	in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earliest of:

(i)	the date on which a notice of abandonment is given to the insurers; and
(ii)	the date of any compromise, arrangement or agreement made by or on behalf of the Guarantor owning that Ship with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

“Transaction” has the meaning given in each Master Agreement;

“Transfer Certificate” has the meaning given in Clause 27.2;

“Transferee Lender” has the meaning given in Clause 27.2;

“Transferor Lender” has the meaning given in Clause 27.2;

“UCC” means the Uniform Commercial Code of the State of New York; and

“Voting Stock” of any person as of any date means the Equity Interests of such person that is at the time entitled to vote in the election of the board of directors or similar governing body of such person.

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1.2	Construction of certain terms. In this Agreement:
	“approved” means, for the purposes of Clause 13, approved in writing by the Agent;
	“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
	“company” includes any corporation, limited liability company, partnership, joint venture, unincorporated association, joint stock company and trust;
	“consent” includes an authorization, consent, approval, resolution, license, exemption, filing, registration, notarization and legalization;
	“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
	“document” includes a deed; also a letter, Email or fax;
	“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims;
	“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
	“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the United States of America, any state thereof, the Council of the European Union, the European Commission, the United Nations or its Security Council or any other Pertinent Jurisdiction;
	“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
	“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
	“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Guarantor owning that Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes natural persons; any company; any state, political sub-division of a state and local or municipal authority; and any international organization;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

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	“protection and indemnity risks” means the usual risks covered by a protection and indemnity association, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
	“regulation” includes any regulation, rule, official directive, request or guideline, whether or not having the force of law, of any governmental body, intergovernmental or supranational, agency, department or regulatory, self-regulatory or other authority or organization;
	“subsidiary” has the meaning given in Clause 1.4;
	“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganization of it or any other person;
	“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and
	“war risks” includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3	Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a)	on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b)	on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
	and “month” and “monthly” shall be construed accordingly.
1.4	Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:
(a)	a majority of the issued Equity Interests in S (or a majority of the issued Equity Interests in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
(b)	P has direct or indirect control over a majority of the voting rights attaching to the issued Equity Interests of S; or
(c)	P has the direct or indirect power to appoint or remove a majority of the directors of S; or

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(d)	P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;
	and any company of which S is a subsidiary is a parent company of S.
1.5	General interpretation. In this Agreement:
(a)	references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
(b)	references in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent approves or reasonably requires and which are acceptable to the Borrower;
(c)	references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
(d)	words denoting the singular number shall include the plural and vice versa; and
(e)	Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6	Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
1.7	Accounting terms. Unless otherwise specified herein, all accounting terms used in this Agreement and in the other Finance Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to any Creditor Party under this Agreement shall be prepared, in accordance with IFRS as from time to time in effect.

1.8 Inferences regarding materiality. To the extent that any representation, warranty, covenant or other undertaking of the Borrower, a Guarantor or any other Security Party in this Agreement or any other Finance Document is qualified by reference to those matters which are not reasonably expected to result in a “material adverse effect” or language of similar import, no inference shall be drawn therefrom that any Creditor Party has knowledge or approves of any noncompliance by such party with any law or regulation.

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2	FACILITY
2.1	Amount of facility. Subject to the other provisions of this Agreement, the Lenders severally agree to make available to the Borrower a loan facility in the principal amount of up to $150,000,000.
2.2	Reduction and cancellation of Commitments.
(a)	Upon not less than three (3) days written notice to the Agent, the Borrower may reduce any unutilized Commitment.
(b)	All unutilized Commitments shall be cancelled and terminated automatically on the expiration date of the Availability Period.
2.3	Lenders’ participations in Advances. Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments, provided that no Lender shall be required to participate in any Advance if doing so would require such Lender to exceed its Commitment.
2.4	Purpose of Advances. The Borrower undertakes with each Creditor Party to use each Advance only for the purpose of financing the lesser of 50% of the Fair Market Value of each Ship and 50% of the purchase price of each Ship.
3	POSITION OF THE LENDERS AND SWAP BANKS
3.1	Interests several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several.
3.2	Individual right of action. Each Lender and each Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement or under a Master Agreement without joining the Agent, the Security Trustee, any other Lender or any other Swap Bank as additional parties in the proceedings.
3.3	Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against the Borrower or any other Security Party in connection with a Finance Document or a Master Agreement without the prior consent of the Majority Lenders.

3.4	Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under any Master Agreement to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:
(a)	the obligations of the other Lenders or Swap Banks being increased; nor
(b)	the Borrower, any other Security Party, any other Lender or any other Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document or under any Master Agreement,
	and in no circumstances shall a Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or a Master Agreement.
3.5	Replacement of a Lender.
(a)	If at any time:

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(i)	any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or
(ii)	the Borrower or any other Security Party becomes obliged in the absence of an Event of Default to repay any amount in accordance with Clause 24 or to pay additional amounts pursuant to Clause 23 or Clause 25 to any Lender in excess of amounts payable to other Lenders generally,

then the Borrower may, on 30 Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrower, which is acceptable to the Agent with the consent of the Majority Lenders (other than the Lender the Borrower desires to replace), which confirms its willingness to assume and by its execution of a Transfer Certificate does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Advances and all accrued interest and/or breakages costs and other amounts payable in relation thereto under the Finance Documents.

(b)

The replacement of a Lender pursuant to this Clause 3.5 shall be subject to the following conditions:

(i)	the Borrower shall have no right to replace the Agent or the Security Trustee;
(ii)	neither the Agent nor any Lender shall have any obligation to the Borrower to find a Replacement Lender;
(iii)	in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 30 days after the date the Borrower notifies the Non-Consenting Lender and the Agent of its intent to replace  the Non-Consenting Lender pursuant to Clause 3.5(a); and

(iv) in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(c) For purposes of this Clause 3.5, in the event that:

(i)	the Borrower or the Agent has requested the Lenders to give a consent in relation to or to agree to a waiver or amendment of any provisions of the Finance Documents;
(ii)	the consent, waiver or amendment in question requires the approval of all Lenders; and
(iii)	Lenders whose Commitments aggregate more than 66.66% percent of the Total Commitments have consented to or agreed to such waiver or amendment,

then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.

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4	DRAWDOWN
4.1	Request for Advance. Subject to the following conditions, the Borrower may request an Advance to be made by delivering to the Agent a completed Drawdown Notice not later than 11:00 a.m. (New York time) three (3) Business Days prior to the intended Drawdown Date.
4.2	Availability. The conditions referred to in Clause 4.1 are that:
(a)	the Drawdown Date must be a Business Day during the Availability Period;
(b)	there shall be no more than one Advance in respect of each Ship;
(c)	the amount of each Advance shall not exceed the lesser of 50% of the Fair Market Value of the Ship to which such Advance relates and 50% of the purchase price stated in the MOA or relevant court order in respect of the Ship to which such Advance relates, and shall be used only to partially finance the acquisition of the Ships pursuant to the MOAs or court orders or reimburse the Borrower or respective Guarantor for costs incurred in connection therewith; and
(d)	the applicable conditions precedent stated in Clause 9 hereof shall have been satisfied or waived as provided therein.
4.3	Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)	the amount of the Advance and the Drawdown Date;
(b)	the amount of that Lender’s participation in the Advance; and

(c)	the duration of the first Interest Period.
4.4	Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorized attorney-in-fact of the Borrower and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5	Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, before 11:00 a.m. (New York City time) on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender under Clause 2.5.
4.6	Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrower shall be made:
(a)	to the account which the Borrower specifies in the Drawdown Notice; and
(b)	in the like funds as the Agent received the payments from the Lenders.

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4.7	Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 to the account of a third party designated by the Borrower in a Drawdown Notice shall constitute the making of the Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.
4.8	Promissory note.
(a)	The obligation of the Borrower to pay the principal of, and interest on, the Loan shall be evidenced by the Note, which shall be dated the date of the first Drawdown Date.
(b)	Each Advance made by the Lenders to the Borrower may be evidenced by a notation of the same made by the Agent on the grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of such Advance.
(c)	Each Lender shall record on its internal records the amount of its participation in each Advance and each payment in respect thereof, and the unpaid balance of such participation in such Advance shall, absent manifest error and to the extent not inconsistent with the notations made by the Agent on the grid attached to the Note, be as so recorded.
(d)	The failure of the Agent or any Lender to make any such notation shall not affect the obligation of the Borrower in respect of such Advance or the Loan nor affect the validity of any transfer by the Agent of the Note.
(e)	On receipt of satisfactory evidence that the Note has been lost, mutilated or destroyed and on surrender of the remnants thereof, if any, the Borrower will promptly replace the Note, without charge to the Creditor Parties, with a similar Note.  If such replacement Note replaces a lost Note it shall bear an endorsement to that effect.  Any lost Note subsequently found shall be surrendered to the Borrower and cancelled.  The Agent shall indemnify the Borrower for any losses, claims or damages resulting from the loss of such Note.

5	INTEREST
5.1	Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.
5.2	Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.
5.3	Payment of accrued interest. In the case of an Interest Period longer than three (3) months, accrued interest shall be paid every three (3) months during that Interest Period and on the last day of that Interest Period.
5.4	Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:
(a)	each rate of interest; and
(b)	the duration of each Interest Period,

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	as soon as reasonably practicable after each is determined.
5.5	Intentionally omitted.
5.6	Absence of quotations by Reference Banks. If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks but if two (2) or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.
5.7	Market disruption. The following provisions of this Clause 5 apply if:
(a)	no Screen Rate is available for an Interest Period and two (2) or more of the Reference Banks do not, before 1:00 p.m. (London time) on the Quotation Date, provide quotations to the Agent in order to fix LIBOR; or
(b)	at least one (1) Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50% of the Loan (or, if an Advance has not been made, Commitments amounting to more than 50% of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for the Interest Period.

5.8	Notification of market disruption. The Agent shall promptly notify the Borrower, each of the Lenders and each of the Swap Counterparties stating the circumstances falling within Clause 5.7 which have caused its notice to be given (the “Market Disruption Notification”); provided that the level of detail of the Market Disruption Notification shall be in the Agent’s sole discretion and the Market Disruption Notification itself shall, absent manifest error, be final, conclusive and binding on all parties hereto.
5.9	Intentionally omitted.
5.10	Intentionally omitted.
5.11	Intentionally omitted.
5.12	Alternative rate of interest during market disruption. For so long as the circumstances falling within Clause 5.7 are continuing, the Agent shall, on behalf of the Lenders, negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest and if no such agreement can be reached by the Borrower and the Agent prior to the expiry of the then current Interest Period, the Agent shall with the agreement of each Lender, for each one month period, set an interest rate representing the actual cost of funding of the Lenders in Dollars of their respective Contribution plus the applicable Margin. Such alternative pricing agreed upon pursuant to this Clause 5.12 shall be binding on all parties hereto. The procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of each such one month period.
5.13	Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay (without premium or penalty) the Loan at the end of the interest period set by the Agent.

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5.14	Prepayment; termination of Commitments. A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders of the Borrower’s notice of intended prepayment and:
(a)	on the date on which the Agent serves that notice, the Total Commitments shall be cancelled; and
(b)	on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin.
5.15	Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.
6	INTEREST PERIODS
6.1	Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2	Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:
(a)	3 or 6 months as notified by the Borrower to the Agent not later than 11:00 a.m. (New York time) three (3) Business Days before the commencement of the Interest Period;
(b)	in the case of the first Interest Period applicable to each Advance other than the first Advance, a period ending on the last day of the Interest Period applicable to the prior Advances then outstanding, whereupon all Advances shall be consolidated and treated as a single Advance;
(c)	3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or
(d)	such other period as the Agent may, with the authorization of the Majority Lenders, agree with the Borrower.
6.3	Duration of Interest Periods for repayment installments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.
6.4	Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than three (3) months, any Lender notifies the Agent by 11:00 a.m. (New York time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of three (3) months.

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7	DEFAULT INTEREST
7.1	Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:
(a)	the date on which the Finance Documents provide that such amount is due for payment; or
(b)	if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
(c)	if such amount has become immediately due and payable under Clause 20.4, the date on which it became immediately due and payable.
7.2	Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.00 percent above:
(a)	in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

(b)	in the case of any other overdue amount, the rate set out at Clause 7.3(b).
7.3	Calculation of default rate of interest. The rates referred to in Clause 7.2 are:
(a)	the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period); and
(b)	the applicable Margin plus, in respect of successive periods of any duration (including at call) up to three (3) months which the Agent may select from time to time:

(i)

LIBOR; or

(ii)

if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the actual cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

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7.4	Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.
7.5	Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.
7.6	Intentionally omitted.
7.7	Application to Master Agreements. For the avoidance of doubt, this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest; Other Amounts) of that Master Agreement shall apply.
8	REPAYMENT AND PREPAYMENT
8.1	Amount of repayment installments. The Borrower shall repay each Advance in equal quarterly installments in such amounts as the Agent and the Borrower agree and the Agent shall notify the Borrower and the Lenders in writing on or before the Drawdown Date for each Advance. The amount of each such equal quarterly installment (and any necessary balloon payment on the Maturity Date) shall be calculated by the Agent on the basis of a linear repayment profile corresponding to full repayment of such Advance by the time the Ship to which such Advance relates attains 16 years of age and such calculation shall be final, conclusive and binding on the Borrower absent manifest error.

8.2	Repayment Dates. The first repayment installment of each Advance shall be paid on the last day of the calendar quarter (March 31, June 30, September 30 and December 31) following the calendar quarter in which such Advance was made and the last repayment installment (together with any balloon payment) shall be paid on the Maturity Date.
8.3	Maturity Date. On the Maturity Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.
8.4	Voluntary prepayment. Subject to the conditions set forth in Clause 8.5, the Borrower may prepay the whole or any part of any Advance or the Loan without premium or penalty.
8.5	Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:
(a)	a partial prepayment shall be $1,000,000 or a multiple of $1,000,000;
(b)	the Agent has received from the Borrower at least three (3) Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made;
(c)	the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any other Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any other Security Party has been complied with (which may be satisfied by the Borrower certifying that no consents are required and that no regulations need to be complied with); and
(d)	the Borrower has complied with Clause 8.13 on or prior to the date of prepayment.

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8.6	Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorization of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.
8.7	Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).
8.8	Mandatory prepayment.
(a)	Subject to paragraphs (b) and (c) below, if a Ship is sold or becomes a Total Loss, the Borrower shall prepay in full the Advance in respect of such Ship and comply with Clause 8.13:

(i) in the case of a sale, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or

(ii) in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

(b) Notwithstanding the requirements of paragraph (a), if a Ship is sold or becomes a Total Loss the Borrower may elect by written notice to the Agent to cause the sale proceeds or insurance proceeds (as the case may be) to be deposited in the Retention Account as Collateral for the Secured Liabilities:

(i)	in the case of a sale, on or before the date on which the sale is completed by delivery of such Ship to the buyer; or
(ii)	in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

	Such proceeds shall be retained in the Retention Account until applied as required by either paragraph (c) or (d) below.
(c)	If within 90 days after the date on which the sale of the relevant Ship is completed or 180 days after the Total Loss Date (as the case may be) the Borrower (or a nominee of the Borrower) desires to purchase a vessel (a “Replacement Ship”) that either:

(i)	meets the requirements stated in the definition of Additional Ship; or
(ii)	in the reasonable discretion of the Majority Lenders, is of substantially similar type, age, quality, condition and value as the Ship that was lost or sold and was built by a shipyard approved by the Majority Lenders,

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	then provided no Event of Default or Potential Event of Default has occurred and is continuing and the Borrower executes and/or delivers (or causes the execution and/or delivery of) the documents required by Part D of Schedule 4, then the Agent, upon the written request of the Borrower, shall release such sale proceeds or insurance proceeds (as the case may be) from the Retention Account to the Borrower or as the Borrower may direct in connection with the acquisition of the Replacement Ship and no mandatory prepayment of the Loan shall be required under Clause 8.8(a).
(d)	If, however, the Borrower (or a nominee of the Borrower) does not consummate the purchase of a Replacement Ship within 90 days after the date on which the sale of the relevant Ship is completed or 180 days after the Total Loss Date (as the case may be), then the sale proceeds or insurance proceeds (as the case may be) deposited in the Retention Account shall be applied by the Agent as a prepayment as required under Clause 8.8(a).
8.9	Release of Collateral and Collateral substitution. Notwithstanding the requirements of Clause 8.8, a mandatory prepayment shall not be required in each of the following circumstances:
(a)	Upon the written request of the Borrower to the Agent, an Initial Ship shall be released as Collateral for the Loan provided that:

(i)	there has been no Advance made in respect of such Initial Ship or, if there has been an Advance in respect of such Initial Ship, such Advance has been repaid; and
(ii)	no Event of Default or Potential Event of Default has occurred and is continuing and the Security Parties are in compliance with all of their respective covenants under the Finance Documents.

(b) Upon the written request of the Borrower to the Agent, a Ship (other than an Initial Ship) shall be released as Collateral for the Loan provided that:

(i)	no Event of Default or Potential Event of Default has occurred and is continuing and the Security Parties are in compliance with all of their respective covenants under the Finance Documents; and
(ii)	on or before the date such Ship is released, either:

(A)	an Initial Ship meeting the requirements stated in the definition of Additional Ship on such date and which has previously been released as Collateral pursuant to Clause 8.9(a); or
(B)	in the reasonable discretion of the Majority Lenders, a vessel that is of substantially similar type, age, quality, condition and value as the Ship that is to be released, and such other vessel was built by a shipyard approved by the Majority Lenders,

	is provided as substitute Collateral (a “Substitute Collateral Ship”) for the Ship that is to be released and the Borrower executes and/or delivers (or causes the execution and/or delivery of) the documents required by Part E of Schedule 4.
8.10	Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 22 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 22.1(b), but without premium or penalty.

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8.11	Application of partial prepayment. Each partial prepayment shall be applied against the repayment installments specified in Clause 8.1 in inverse order of maturity.
8.12	No reborrowing. No amount prepaid may be reborrowed.
8.13	Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortization) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1.

9	CONDITIONS PRECEDENT
9.1	Documents, fees and no default. Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:
(a)	[intentionally omitted];
(b)	that, on or before the service of the first Drawdown Notice, the Agent receives:

(i)

the documents described in Part A of Schedule 4 in form and substance satisfactory to the Agent; and

(ii)

such documentation and other evidence as is reasonably requested by the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary “know your customer” or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement and the other Finance Documents, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the requirements of the USA Patriot Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”);

(c)	that, on each Drawdown Date but prior to the making of an Advance in respect of an Initial Ship, the Agent receives or is satisfied that it will receive on the making of such Advance the documents described in Part B of Schedule 4 in form and substance satisfactory to it;
(d)	that, on each Drawdown Date but prior to the making of an Advance in respect of an Additional Ship, the Agent receives or is satisfied that it will receive on the making of such Advance the documents described in Part C of Schedule 4 in form and substance satisfactory to it;
(e)	that, on or before the service of the first Drawdown Notice, the Agent receives the arrangement fee and upfront fee referred to in Clause 21.1, any accrued commitment fee payable pursuant to Clause 21.1 and the first installment of the annual agency fee referred to in Clause 21.1 and has received payment of the expenses referred to in Clause 21.2; and
(f)	that both at the date of each Drawdown Notice and at each Drawdown Date:

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(i)

no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance;

(ii)

the representations and warranties in Clause 10 and those of the Borrower or any other Security Party which are set out in the other Finance Documents (other than those relating to a specific date) would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing, provided that the requirements of this Clause 9.1(f)(ii) shall apply in respect of the representations and warranties in Clause 10.22 only as of the acquisition date of the relevant Ship; and

(iii)	none of the circumstances contemplated by Clause 5.7 has occurred and is continuing, unless the Agent is satisfied that an alternative rate of interest can be set pursuant to Clause 5.12;
(iv)	there has been no material change in the consolidated financial condition, operations or business prospects of the Borrower since the date on which the Borrower provided information concerning those topics to the Agent and/or any Lender;

(g)	that, if the Collateral Maintenance Ratio were applied immediately following the making of such Advance, the Borrower would not be obliged to provide additional Collateral or prepay part of the Loan under that Clause; and
(h)	that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorization of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.
9.2	Waiver of conditions precedent. Notwithstanding anything in Clause 9.1 to the contrary:
(a)	except with respect to the circumstances described in Clause 9.2(b), if the Agent, with the consent of the Majority Lenders, permits the Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that such conditions are satisfied within ten (10) Business Days after such Drawdown Date (or such longer period as the Agent may specify); and
(b)	only if required under the terms of MOA or another contract for the acquisition of an Additional Ship, an Advance may be borrowed before the applicable conditions set forth in Clause 9.1 are satisfied and:

(i)

each Lender agrees to fund its Contribution on a day not more than five (5) Business Days prior to the date of the scheduled acquisition and delivery of such Ship (such date, the “Delivery Date”); and

(ii)

the Agent shall on the date on which such Advance is funded (or as soon thereafter as practicable) (A) preposition an amount equal to the aggregate principal amount of such Advance at a bank or other financial institution (the “Seller’s Bank”) satisfactory to the Agent, which funds shall be held at the Seller’s Bank in the name and under the sole control of the Agent or one of its Affiliates and (B) issue a SWIFT MT 199 or other similar communication (each such communication, a “Disbursement Authorization”) authorizing the release of such funds by the Seller’s Bank on the relevant Delivery Date upon receipt of a Protocol of Delivery and Acceptance in respect of such Ship duly executed by the Seller and the relevant Guarantor and countersigned by a representative of the Agent;

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provided that if delivery of such Ship does not occur within five (5) Business Days after the scheduled Delivery Date, the funds held at the Seller’s Bank shall be returned to the Agent for further distribution to the Lenders.

For the avoidance of doubt, the parties hereto acknowledge and agree that:

(1)	the date on which the Lenders fund the Advance constitutes the Drawdown Date in respect of such Advance and all interest and fees thereon shall accrue from such date;
(2)	the Agent and the Lenders suspend fulfillment of the conditions precedent set forth in Schedule 4, Part C, Paragraphs 1, 10, 11 and 13 solely for the time period on and between such Drawdown Date and the relevant Delivery Date, and the Borrower acknowledges and agrees that fulfillment of such conditions precedent to the satisfaction of the Agent shall be required as a condition precedent to the countersignature by a representative of the Agent of the Protocol of Delivery and Acceptance referred to in Clause 9.2(b)(ii);
(3)	from the date the proceeds of the Advance are deposited at the Seller’s Bank to the Delivery Date (or, if delivery of such Ship does not occur within the time prescribed in the Disbursement Authorization, the date on which the funds are returned to the Agent for further distribution to the Lenders), the Borrower shall be entitled to interest on the Advance at the applicable rate, if any, paid by the Seller’s Bank for such deposited funds;
(4)	if such Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of the Advance are returned to the Agent and distributed to the Lenders, (i) the Borrower shall pay all accrued interest and fees in respect of such returned proceeds on the date such proceeds are returned to the Agent and (ii) the relevant available Commitment will be increased by an amount equal to the aggregate principal amount of the Loan proceeds so returned; and
(5)	if the Borrower has instructed the Agent to convert the aggregate principal amount of the Advance borrowed into a currency other than Dollars for deposit with the Seller’s Bank and such Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of the Advance are returned to the Agent for further distribution to the Lenders, the Agent shall convert the aggregate principal amount of funds so returned back into Dollars and if such funds are less than the Dollar amount of the aggregate principal amount of the Advance incurred on the relevant Drawdown Date, the Borrower shall immediately repay the difference and, in any event, the Borrower shall pay any and all fees, charges and expenses arising from such conversion.

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10	REPRESENTATIONS AND WARRANTIES
10.1	General. Each of the Borrower and the Guarantors represents and warrants to each Creditor Party as of the Effective Date and each Drawdown Date as follows.
10.2	Status. Each Security Party is:
(a)	duly incorporated or formed and validly existing and in good standing under the law of its jurisdiction of incorporation or formation; and
(b)	duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a material adverse effect on its business, assets or financial condition or which may affect the legality, validity, binding effect or enforceability of the Finance Documents,

	and there are no proceedings or actions pending or contemplated by any Security Party, or to the knowledge of the Borrower or the Guarantors contemplated by any third party, to dissolve, wind-up or terminate the Borrower or any other Security Party.
10.3	Company power; consents. Each Security Party has the capacity and has taken all action, and no consent of any person is required, for:
(a)	it to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted;
(b)	it to execute each Finance Document and each Master Agreement to which it is or is to become a party;
(c)	it to execute the MOA to which it is or is to become a party, to purchase and pay for the relevant Ship under the relevant MOA or court order and register the relevant Ship in its name;
(d)	it to comply with its obligations under each Finance Document to which it is or is to become a party and the Master Agreements;
(e)	it to grant the Security Interests granted by it pursuant to the Finance Documents to which it is a party and the Master Agreements;
(f)	the perfection or maintenance of the Security Interests created by the Finance Documents (including the first priority nature thereof); and
(g)	the exercise by any Creditor Party of their rights under any of the Finance Documents or the Master Agreements or the remedies in respect of the Collateral pursuant to the Finance Documents or the Master Agreements to which it is a party,
	except, in each case, for consents which have been duly obtained, taken, given or made and are in full force and effect.

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10.4	Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation.
10.5	Legal validity; effective Security Interests. Subject to any relevant insolvency laws affecting creditors’ rights generally:
(a)	the Finance Documents and the Master Agreements to which each Security Party is a party, constitute or, as the case may be, will constitute upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), such Security Party’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and

(b)	the Finance Documents to which each Security Party is a party, creates or, as the case may be, will create upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate.
10.6	No third party Security Interests. Without limiting the generality of Clause 10.5, at the time of the execution and delivery of each Finance Document:
(a)	the relevant Security Party will have the right to create all the Security Interests which that Finance Document purports to create; and
(b)	no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.
10.7	No conflicts. The execution of each Finance Document and each Master Agreement, and the borrowing of each Advance, and compliance with each Finance Document and each Master Agreement will not involve or lead to a contravention of:
(a)	any law or regulation; or
(b)	the constitutional documents of any Security Party; or
(c)	any contractual or other obligation or restriction which is binding on any Security Party or any of its assets.
10.8	Taxes.
(a)	All payments which a Security Party is liable to make under the Finance Documents to which it is a party are permitted under applicable law to be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
(b)	The Borrower and each other Security Party has filed or has caused to be filed all tax returns and other reports that it is required by applicable law or regulation to file in any Pertinent Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in any Pertinent Jurisdiction, other than taxes and charges:

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(i)	which are (A) not yet delinquent or (B) being contested in good faith by appropriate proceedings and for which adequate reserves have been established and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of a Ship; or
(ii)	the non-payment of which could not reasonably be expected to have a material adverse effect on such company.

The charges, accruals, and reserves on the books of the Borrower and each other Security Party respecting taxes are adequate in accordance with IFRS.

(c)	No material claim for any tax has been asserted in writing against the Borrower and each other Security Party by any Pertinent Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in the most recent balance sheet of such company or disclosed in the notes thereto, if any.
(d)	The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents and the consummation of the transactions contemplated thereby will not cause any of the Creditor Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in any Pertinent Jurisdiction.
(e)	No taxes are required by any governmental authority in any Pertinent Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document.
(f)	The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be deemed to be resident, domiciled or carrying on business in any Pertinent Jurisdiction or subject to taxation under any law or regulation of any governmental authority in any Pertinent Jurisdiction.
(g)	Other than the recording of the Mortgages in accordance with the laws of an Approved Flag and such filings as may be required in a Pertinent Jurisdiction in respect of certain of the Finance Documents, and the payment of fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.
10.9	No default. No Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance.
10.10	Information. All financial statements, information and other data furnished by or on behalf of a Security Party to any of the Creditor Parties:
(a)	was true and accurate at the time it was given;
(b)	such financial statements, if any, have been prepared in accordance with IFRS and accurately and fairly represent the financial condition of such Security Party as of the date or respective dates thereof and the results of operations of such Security Party for the period or respective periods covered by such financial statements;

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(c)	there are no other facts or matters the omission of which would have made or make any such information false or misleading;
(d)	there has been no material adverse change in the financial condition, operations or business prospects of any Security Party since the date on which such information was provided other than as previously disclosed to the Agent in writing; and

(e)	none of the Security Parties has any contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate except as disclosed in such statements, information and data.
10.11	No litigation. No legal or administrative action involving a Security Party (including any action relating to any alleged or actual breach of the ISM Code, the ISPS Code or any Environmental Law) has been commenced or taken by any person, or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the business, assets or financial condition of a Security Party or which may affect the legality, validity, binding effect or enforceability of the Finance Documents.
10.12	ISM Code and ISPS Code compliance. The relevant Guarantor has obtained or will obtain or will cause to be obtained all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ship owned by it and its operation and will be or will cause such Ship and the relevant Approved Manager to be in full compliance with the ISM Code and the ISPS Code.
10.13	Validity and completeness of MOA. To the extent entered into on a relevant Drawdown Date and prior to the delivery of the Additional Ship to which it relates, each MOA constitutes valid, binding and enforceable obligations of the Seller and the relevant Guarantor that is a party thereto in accordance with its terms and:
(a)	the copy of such MOA delivered to the Agent is a true and complete copy; and
(b)	no amendments or additions to such MOA have been agreed (without any amendments or additions being disclosed to the Agent) nor has the relevant Guarantor or Seller waived any of their respective rights under such MOA.
10.14	No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, any Guarantor, any subsidiary or Affiliate of the Borrower, or any third party in connection with a MOA, other than as provided in such MOA and disclosed to the Agent in writing.
10.15	Margin Stock. The Borrower and the Guarantors are not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of the Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.
10.16	Compliance with law; Environmentally Sensitive Material. Except to the extent the following could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Borrower, or which may affect the legality, validity, binding effect or enforceability of the Finance Documents:
(a)	the operations and properties of each of the Security Parties comply with all applicable laws and regulations, including without limitation Environmental Laws, all necessary Environmental Permits have been obtained and are in effect for the operations and properties of each of the Security Parties and each of the Security Parties is in compliance in all material respects with all such Environmental Permits; and

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(b)	none of the Security Parties has been notified in writing by any person that it or any of its subsidiaries or Affiliates is potentially liable for the remedial or other costs with respect to treatment, storage, disposal, release, arrangement for disposal or transportation of any Environmentally Sensitive Material, except for costs incurred in the ordinary course of business with respect to treatment, storage, disposal or transportation of such Environmentally Sensitive Material.
10.17	Ownership structure.
(a)	All of the Equity Interests of the Borrower have been validly issued, are fully paid, non-assessable.
(b)	All of the Equity Interests of each Guarantor have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests other than Permitted Security Interests and are owned beneficially and of record by the Borrower.
(c)	None of the Equity Interests of any Guarantor are subject to any existing option, warrant, call, right, commitment or other agreement of any character to which any of the Guarantors is a party requiring, and there are no Equity Interests of any of the Guarantors outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional Equity Interests of any of the Guarantors or other Equity Interests convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests of any of the Guarantors.
10.18	Investment company, Holding company, etc. The Borrower is not:
(a)	an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended;
(b)	a “holding company” or a “subsidiary company” of a “holding company” or an affiliate of a “holding company” or of a “subsidiary company” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or
(c)	a “public utility” within the meaning of the Federal Power Act of 1920, as amended.
10.19	Asset control.
(a)	The Borrower is not a Prohibited Person, is not controlled by, or, to the best of its knowledge, acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person;
(b)	No proceeds of any Advance shall be made available, directly or, to the best of the Borrower’s knowledge, indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or, to the best of the Borrower’s knowledge, indirectly, applied in a manner or for a purpose prohibited by Sanctions.

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10.20	ERISA.
(a)	None of the Security Parties is a party to any Plan or Multiemployer Plan.
(b)	The execution and delivery of this Agreement and the consummation of the transactions hereunder will not involve any “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code.
(c)	No ERISA Termination Event has occurred.
(d)	No ERISA Funding Event exists or has occurred.
10.21	No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of an Advance, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that:
(a)	it is acting for its own account;
(b)	it will use the proceeds of each Advance for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and
(c)	the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and United States Bank Secrecy Act of 1970, as amended (the “Bank Secrecy Act”).
10.22	Ships. As of the acquisition date in respect of each Ship, such Ship will be:
(a)	in the sole and absolute ownership of a Guarantor and duly registered in such Guarantor’s name, unencumbered save and except for the Mortgage thereon in favor of the Security Trustee recorded against it and as permitted thereby;
(b)	seaworthy for hull and machinery insurance warranty purposes and in every way fit for its intended service;
(c)	insured in accordance with the provisions of this Agreement and the requirements hereof in respect of such Insurances will have been complied with;
(d)	in class (as evidenced by a Confirmation of Class Certificate) in accordance with the provisions of this Agreement and the requirements hereof in respect of such classification will have been complied with; and

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(e)	managed by an Approved Manager pursuant to an Approved Management Agreement.
10.23	Place of Business. For purposes of the UCC, each Security Party has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:

9, Boulevard Charles III

Monaco 98000

None of the Security Parties has a place of business in the United States of America, the District of Columbia, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America, other than its representative office at:

150 East 58^th Street
New York, New York 10155

10.24	Solvency. In the case of the Borrower and each of the Guarantors:
(a)	the sum of its assets, at a fair valuation, does and will exceed its liabilities (including guarantees), including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities;
(b)	the present fair market saleable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities, as they mature;
(c)	it does not and will not have unreasonably small working capital with which to continue its business; and
(d)	it has not incurred, does not intend to incur and does not believe it will incur, debts beyond its ability to pay such debts as they mature.
10.25	Borrower’s business; Guarantors’ business. From the date of its incorporation until the date hereof, neither the Borrower nor any of the Guarantors has conducted any business other than in connection with, or for the purpose of, owning, chartering and operating the Ships.
11	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS
11.1	Affirmative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.1 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing:
(a)	Performance of obligations. Each Security Party shall duly observe and perform its obligations under each Charter and each Finance Document to which it is or is to become a party.

(b) Notification of defaults (etc). The Borrower shall promptly notify the Agent, upon becoming aware of the same, of:

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(i)	the occurrence of an Event of Default or of any Potential Event of Default or any other event (including any litigation) which is likely to materially adversely affect any Security Party’s ability to perform its obligations under each Charter and each Finance Document to which it is or is to become a party;
(ii)	any default by any party to a Charter; and
(iii)	any damage or injury caused by or to a Ship in excess of $5,000,000.

(c) Confirmation of no default. The Borrower will, within two (2) Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of the Borrower and which states that:

(i)	no Event of Default or Potential Event of Default has occurred; or
(ii)	no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

	The Agent may serve requests under this Clause 11.1(c) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 33% of the Loan or (if no Advances have been made) Commitments exceeding 33% of the Total Commitments, and this Clause 11.1(c) does not affect the Borrower’s obligations under Clause 11.1(b).
(d)	Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any other Security Party, any Approved Manager or any Ship, its Earnings or Insurances as soon as such action is instituted, unless it is likely that the legal or administrative action cannot be considered material in the context of any Finance Document.
(e)	Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(i)	the Borrower and, its subsidiaries; or
(ii)	any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Agent.

(f)

Books of record and account. Each Security Party shall keep proper books of record and account, in which full and materially correct entries shall be made of all financial transactions and the assets and business of such Security Party in accordance with IFRS, and the Agent shall have the right to examine such books and records wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done without undue interference with the day to day business of such Security Party.

(g) Financial reports. Whether or not the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, the Borrower will furnish to the Agent:

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(i)	within 75 days after the end of each of the first three fiscal quarters in each Fiscal Year, quarterly reports on Form 6-K (or any successor form) containing unaudited financial statements (including a balance sheet and statement of income, changes in stockholders’ equity and cash flow) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding Fiscal Year);
(ii)	within 120 days after the end of each Fiscal Year, an annual report on Form 20-F (or any successor form) containing the information required to be contained therein for such Fiscal Year;
(iii)	at or prior to such times as would be required to be filed or furnished to the SEC if the Borrower were then a “foreign private issuer” subject to Sections 13(a) or 15(d) of the Exchange Act, all such other reports and information that the Borrower would have been required pursuant thereto;
(iv)	together with the financial statements that the Borrower delivers in (i) and (ii) above, a Compliance Certificate;
(v)	no later than January 31 of each Fiscal Year of the Borrower, a copy of its one (1) year forecast and projection, certified to be true and complete by the chief financial officer of the Borrower; and
(vi)	such other financial statements, annual budgets and projections as may be reasonably requested by the Agent,

provided that to the extent that the Borrower ceases to qualify as a “foreign private issuer” within the meaning of the Exchange Act, whether or not the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, the Borrower will furnish to the Agent all reports and other information that it would be required to file with (or furnish to) the Commission pursuant Sections 13(a) or 15(d) of the Exchange Act if it were required to file such documents under the Exchange Act as follows:

(A)	if the Borrower is then subject to Sections 13(a) or 15(d) of the Exchange Act, within 30 days of the respective dates on which the Borrower is required to file such documents pursuant to the Exchange Act; or
(B)	if the Borrower is not then subject to Sections 13(a) or 15(d) under the Exchange Act, the applicable time periods described above with respect to quarterly, annual and other reports and information.

Notwithstanding the foregoing, the Borrower will be deemed to have furnished to the Agent such reports and information referred to above if the Borrower has filed such reports and information with the Commission via the EDGAR system (or any successor system) and such reports and information are publicly available.

(h) Appraisals of Fair Market Value. The Borrower shall procure and deliver to the Agent two written appraisal reports setting forth the Fair Market Value of each Ship as follows:

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(i)	at the Borrower’s expense, for inclusion with each Compliance Certificate required to be delivered together with the second quarterly and the annual financial statements that the Borrower delivers under Clause 11.1(g)(i) and (ii); and
(ii)	at the Lenders’ expense, at all other times upon the request of the Agent or the Majority Lenders, unless an Event of Default has occurred and is continuing, in which case the Borrower shall procure it at its expense as often as requested.

(i)	Taxes. Each Security Party shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a Security Interest upon the Collateral or any part thereof, except in each case, for any such taxes (i) as are being contested in good faith by appropriate proceedings or (ii) the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of the Borrower or any other Security Party or to affect the legality, validity, binding effect or enforceability of the Finance Documents.
(j)	Consents. Each Security Party shall obtain or cause to be obtained, maintain in full force and effect and comply with the conditions and restrictions (if any) imposed in connection with, every consent and do all other acts and things which may from time to time be necessary or required for the continued due performance of all of its obligations under any Charter and each Finance Document to which it is or is to become a party, and shall deliver a copy of all such consents to the Agent promptly upon its request.
(k)	Compliance with applicable law. Each Security Party shall comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation, all Environmental Laws and regulations relating to thereto, the failure to comply with which would be likely to have a material adverse effect on the financial condition of the Borrower or affect the legality, validity, binding effect or enforceability of any Charter and each Finance Document to which it is or is to become a party.
(l)	Existence. Each Security Party shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence in good standing under the laws of the jurisdiction of incorporation or formation.
(m)	Borrower’s business. The Borrower shall conduct business only in connection with, or for the purpose of, owning, managing, chartering and operating the Ships.
(n)	Properties. Except to the extent the failure to do so could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Security Parties or which may affect the legality, validity, binding effect or enforceability of the Finance Documents, each Security Party shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.

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(o)	Loan proceeds. The Borrower shall use the proceeds of each Advance solely to partially finance the acquisition of a Ship or to refinance a previously acquired Ship.
(p)	Change of place of business. The Borrower shall notify promptly the Agent of any change in the location of the place of business where it or any other Security Party conducts its affairs and keeps its records.
(q)	Pollution liability. Each Security Party shall take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of pollution incidents or as may be reasonably required to protect the interests of the Creditor Parties with respect thereto.
(r)	Subordination of loans. Each Security Party shall cause all loans made to it by any Affiliate or subsidiary and all sums and other obligations (financial or otherwise) owed by it to any Affiliate or subsidiary to be fully subordinated to all Secured Liabilities.
(s)	Money laundering. The Borrower shall to the best of its knowledge and ability comply, and cause each of its subsidiaries to comply, with any applicable law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act.
(t)	Asset control. The Borrower shall to the best of its knowledge and ability ensure that:

(i)	it is not owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person; and
(ii)	no proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

(u) ERISA. Promptly upon:

(i)	the occurrence of any ERISA Termination Event;
(ii)	the occurrence or existence of any ERISA Funding Event; or
(iii)	the occurrence with respect to a Plan of a Reportable Event,

	the Borrower shall furnish or cause to be furnished to the Agent, with copies for each of the Lenders, written notice thereof and the action, if any, which the Borrower has taken and proposes to take with respect thereto.
(v)	Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of any Security Party under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

(w)	Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are dispatched, copies of all communications which are dispatched to the Borrower’s shareholders or creditors or any class of them.
(x)	Maintenance of Security Interests. The Borrower will:

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(i)

at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(ii)

without limiting the generality of paragraph (i), at its own cost, promptly register, file, record or enroll any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

(y) “Know your customer” checks. If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of the Borrower or any other Security Party after the date of this Agreement; or
(iii)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (iii), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (iii), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(z)

Charter Assignment. Each Guarantor who enters into a Charter for its Ship shall execute and deliver a Charter Assignment provided that a Charter Assignment shall not be required under this Agreement unless the Borrower, using reasonable commercial efforts, is able to obtain the consent of the charterer named in the relevant Charter to such Charter Assignment.

(aa)

Further assurances. From time to time, at its expense, the Borrower and each of the Guarantors shall duly execute and deliver to the Agent such further documents and assurances as the Majority Lenders or the Agent may request to effectuate the purposes of this Agreement, the other Finance Documents or obtain the full benefit of any of the Collateral.

11.2

Negative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.2 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld:

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(a)	Security Interests. Each Guarantor will not create, assume or permit to exist any Security Interest whatsoever upon any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Security Interests.
(b)	Sale of assets. Each Security Party shall not sell, transfer or lease (other than in connection with a Charter) all or substantially all of its properties and assets, or enter into any transaction of merger or consolidation or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution), provided that any Guarantor may sell its respective Ship pursuant to the terms of this Agreement.
(c)	Affiliate transactions. No Security Party will enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate or subsidiary, other than on terms and conditions substantially as favorable to such person as would be obtainable by such person at the time in a comparable arm’s-length transaction with a person other than an Affiliate or subsidiary.
(d)	Change of business. The Borrower will not change the nature of its business or commence any business otherwise than in connection with, or for the purpose of, operating the Ships.
(e)	Change of Control; Negative pledge.

(i)	The Borrower will not permit any act, event or circumstance that would result in a Change of Control or would result in the Borrower owning directly or indirectly less than 100% of the issued and outstanding Equity Interests in each Guarantor.
(ii)	The Borrower will not permit any pledge or assignment of any Guarantor’s Equity Interests except in favor of the Security Trustee to secure the Secured Liabilities.

(f) Increases in capital. None of the Guarantors will increase its capital by way of the issuance of any class or series of preferred securities or common or ordinary securities, or otherwise howsoever, or create any new class of equity, that is not subject to a Security Interest to secure the Secured Liabilities.

(g)	Financial Indebtedness. No Guarantor will incur any Financial Indebtedness other than the Loan and the Swap Exposure.
(h)	Dividends. The Borrower may not pay dividends if an Event of Default has occurred and is continuing or would result therefrom. None of the Guarantors will create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Guarantor to (i) pay dividends or make any other distributions on its capital stock to the Borrower or pay any Financial Indebtedness owed to the Borrower, (ii) make any loans or advances to the Borrower or (iii) transfer any of its property or assets to the Borrower.
(i)	Intentionally omitted.
(j)	Intentionally omitted.

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(k)	Loans and investments. The Guarantors shall not make any loan or advance to, make any investment in, or enter into any working capital maintenance or similar agreement with respect to any person, whether by acquisition of Equity Interests or indebtedness, by loan, guarantee or otherwise.
(l)	Acquisition of capital assets. The Guarantors shall not acquire any capital assets (including any vessel other than a Ship) by purchase, charter or otherwise, provided that for the avoidance of doubt nothing in this Clause 11.2(l) shall prevent or be deemed to prevent capital improvements being made to a Ship.
(m)	Sale and leaseback. No Guarantor shall enter into any arrangements, directly or indirectly, with any person whereby it shall sell or transfer any of its property, whether real or personal, whether now owned or hereafter acquired, if it, at the time of such sale or disposition, intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.
(n)	Changes to Fiscal Year and accounting policies. The Borrower shall not change its Fiscal Year or make or permit any change in accounting policies affecting (i) the presentation of financial statements or (ii) reporting practices, except in either case in accordance with IFRS or pursuant to the requirements of applicable laws or regulations.
(o)	Jurisdiction of incorporation or formation; Amendment of constitutional documents. Neither the Borrower nor any of the Guarantors shall change the jurisdiction of its incorporation or formation. None of the Guarantors shall amend its constitutional documents. The Borrower shall not amend its constitutional documents in any manner that would adversely affect its obligations under this Agreement or any other Finance Document to which it is a party.
(p)	Sale of Ship. Except as otherwise provided in Clause 8.8 or 8.9, no Security Party will consummate the sale of its Ship without paying or causing to be paid all amounts due and owing under this Agreement and the other Finance Documents prior to or simultaneously with the consummation of such sale.

(q)	Change of location. No Security Party shall change the location of its chief executive office or the office where its corporate records are kept or open any new office for the conduct of its business on less than thirty (30) days prior written notice to the Agent.
(r)	Money laundering. The Borrower shall not contravene any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council and comparable United States federal and state laws, including without limitation the Bank Secrecy Act and the PATRIOT Act.
12	FINANCIAL COVENANTS
12.1	General. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrower undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 12 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing.

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12.2	Maximum leverage. The Borrower shall maintain a ratio of Net Debt to Consolidated Total Capitalization of not more than 0.60 to 1.00, to be tested on the last day of each fiscal quarter.
12.3	Minimum tangible net worth. The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $150,000,000 plus (a) 25% of the Borrower’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after July 1, 2010 and (b) 75% of the value of the Equity Proceeds realized from any issuance of Equity Interests in the Borrower occurring on or after July 1, 2010.
12.4	Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing quarter basis from and including the third fiscal quarter of 2011, provided that for the third fiscal quarter of 2012 and all periods thereafter such ratio shall be calculated on a trailing four quarter basis.
12.5	Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels.
13	MARINE INSURANCE COVENANTS
13.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 13 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing.

13.2	Maintenance of obligatory insurances. Each Security Party shall keep the Ship owned by it insured at the expense of that Security Party against:
(a)	fire and usual marine risks (including hull and machinery and excess risks);
(b)	war risks;
(c)	protection and indemnity risks; and
(d)	any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Security Party to insure and which are specified by the Security Trustee by notice to the Borrower.
13.3	Terms of obligatory insurances. The relevant Security Party shall effect such insurances in respect of the Ship owned by it:
(a)	in Dollars;
(b)	in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:

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(i)	when aggregated with the insured values of the other Ships then financed under this Agreement, 120% of the aggregate of the Loan and the Swap Exposure of each Swap Counterparty; and
(ii)	the Fair Market Value of the Ship owned by it;

	provided that not less than 80% of the insured value established pursuant to (i) or (ii) above shall be on a hull and machinery basis.
(c)	in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;
(d)	in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;
(e)	on approved terms; and
(f)	through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.
13.4	Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, each Security Party shall procure that the obligatory insurances effected by it shall:

(a) subject always to paragraph (b), name the relevant Security Party as the sole named assured unless the interest of every other named assured is limited:

(i) in respect of any obligatory insurances for hull and machinery and war risks;

(A)	to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)	to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

(ii) in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

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	and every other named assured has undertaken in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between the relevant Security Party and every other named assured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b)	whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lenders, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c)	name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)	provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;
(e)	provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party; and
(f)	provide that the Security Trustee may make proof of loss if the Borrower fails to do so.
13.5	Renewal of obligatory insurances. The Borrower shall:
(a)	at least 14 days before the expiry of any obligatory insurance:

(i)	notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower or the relevant Security Party proposes to renew that obligatory insurance and of the proposed terms of renewal; and
(ii)	obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b)	at least 7 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and
(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.
13.6	Copies of policies; letters of undertaking. The relevant Security Party shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:
(a)	they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;
(b)	they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;
(c)	they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

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(d)	they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Security Party or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and
(e)	they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Security Party under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.
13.7	Copies of certificates of entry. The relevant Security Party shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:
(a)	a certified copy of the certificate of entry for that Ship;
(b)	a letter or letters of undertaking in such form as may be required by the Security Trustee;

(c)	where required to be issued under the terms of insurance/indemnity provided by the protection and indemnity association, but only if and when so requested by the Agent, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the relevant Security Party in relation to that Ship in accordance with the requirements of such protection and indemnity association; and
(d)	a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.
13.8	Deposit of original policies. The relevant Security Party shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.
13.9	Payment of premiums. The relevant Security Party shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.
13.10	Guarantees. The relevant Security Party shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
13.11	Compliance with terms of insurances. The relevant Security Party shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:
(a)	the relevant Security Party shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

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(b)	the relevant Security Party shall not make any changes relating to the classification or the Classification Society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;
(c)	the relevant Security Party shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America’s Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
(d)	the relevant Security Party shall not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.12	Alteration to terms of insurances. The relevant Security Party shall neither make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.
13.13	Settlement of claims. The relevant Security Party shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
13.14	Provision of copies of communications. The relevant Security Party shall provide the Security Trustee, at the time of each such communication, copies of all written communications between such Security Party and:
(a)	the approved brokers;
(b)	the approved protection and indemnity and/or war risks associations; and
(c)	the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i)	such Security Party’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)	any credit arrangements made between such Security Party and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

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13.15	Provision of information. In addition, the relevant Security Party shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:
(a)	obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
(b)	effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;
	and such Security Party shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).
13.16	Mortgagee’s interest, additional perils and political risk insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance, a mortgagee’s political risks insurance and a mortgagee’s interest marine insurance in such amounts(not to exceed 120% of the Loan), on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the relevant Security Party shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.17	Review of insurance requirements. The Security Trustee may and, on instruction of the Majority Lenders, shall review, at the expense of the Borrower, the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent or the Majority Lenders significant and capable of affecting the relevant Security Party or a Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the relevant Security Party may be subject.)
13.18	Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Security Trustee may or, on instruction of the Majority Lenders, shall reasonably consider appropriate in the circumstances and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Security Parties accordingly.
13.19	Compliance with instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the relevant Security Party implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.
14	SHIP COVENANTS
14.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 14 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing.

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14.2	Ship’s name and registration. Each Security Party shall keep the Ship owned by it registered in its name under the law of the Approved Flag on which such Ship was registered when it became subject to a Mortgage; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperiled; and shall not change the name or port of registry of the Ship.
14.3	Repair and classification. Each Security Party shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)	consistent with first-class ship ownership and management practice;
(b)	so as to maintain the highest class for such Ship with the Classification Society, free of overdue recommendations and conditions affecting that Ship’s class; and
(c)	so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which such Ship was registered when it became subject to a Mortgage or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

14.4	Classification Society instruction. The relevant Security Party shall instruct the Classification Society referred to in Clause 14.3(b):
(a)	to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Classification Society in relation to the Ship owned by that Security Party;
(b)	to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Security Party and that Ship at the offices of the Classification Society and to take copies of them;
(c)	to notify the Security Trustee immediately in writing if the Classification Society:

(i)	receives notification from that Security Party or any other person that that Ship’s Classification Society is to be changed; or
(ii)	becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Security Party’s or that Ship’s membership of the Classification Society;

(d) following receipt of a written request from the Security Trustee:

(i)	to confirm that that Security Party is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or
(ii)	if that Security Party is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society.

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14.5

Modification. The relevant Security Party shall not make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on that Ship which would or is reasonably likely to materially reduce its value.

14.6

Removal of parts. The relevant Security Party shall not remove any material part of the Ship owned by it, or any item of equipment owned by it installed on, that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favor of any person other than the Security Trustee and becomes on installation on that Ship the property of that Security Party and subject to the security constituted by the Mortgage (and Deed of Covenant where applicable), provided that the relevant Security Party may install and remove equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.

14.7	Surveys. The relevant Security Party shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee, provide the Security Trustee with copies of all survey reports.
14.8	Inspection. The relevant Security Party shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. The Security Trustee shall use reasonable endeavors to ensure that the operation of the Ship is not adversely affected as a result of such inspections.
14.9	Prevention of and release from arrest. The relevant Security Party shall promptly discharge:
(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, or its Earnings or Insurances;
(b)	all taxes, dues and other amounts charged in respect of the Ship owned by it, or its Earnings or Insurances; and
(c)	all other outgoings whatsoever in respect of the Ship owned by it, or its Earnings or Insurances,
	and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Security Party shall procure its release by providing bail or otherwise as the circumstances may require.
14.10	Compliance with laws etc. Each Guarantor shall:
(a)	comply, or procure compliance with, all laws or regulations, the non-compliance with which could reasonably be expected to have a material adverse effect on the Borrower’s business, assets or financial condition:

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(i)	relating to its business generally; or
(ii)	relating to the ownership, employment, operation and management of the Ship owned by it,

	including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions;
(b)	without prejudice to the generality of paragraph (a) above, not employ the Ship owned by it nor allow its employment in any manner contrary to any laws or regulations, including but not limited to the ISM Code, the ISPS Code; all Environmental Laws and all Sanctions; and
(c)	in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and that Guarantor has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

14.11	Provision of information. The relevant Security Party shall promptly provide the Security Trustee with any information which it requests regarding:
(a)	the Ship owned by it, its employment, position and engagements;
(b)	that Ship’s Earnings and payments and amounts due to that Ship’s master and crew;
(c)	any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;
(d)	any towages and salvages; and
(e)	the relevant Security Party’s, the relevant Approved Manager’s or that Ship’s compliance with the ISM Code and the ISPS Code,
	and, upon the Security Trustee’s request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of the relevant Security Party’s or the relevant Approved Manager’s Document of Compliance.
14.12	Notification of certain events. The relevant Security Party shall immediately notify the Security Trustee by fax or email, confirmed forthwith by letter, of:
(a)	any casualty which is or is likely to be or to become a Major Casualty;
(b)	any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)	any requirement or condition made by any insurer or the Classification Society or by any competent authority which is not immediately complied with;

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(d)	any arrest or detention of the Ship owned by it, any exercise or purported exercise of any Security Interest on that Ship or its Earnings or any requisition of that Ship for hire;
(e)	any intended dry docking of the Ship owned by it;
(f)	any Environmental Claim made against the relevant Security Party or in connection with the Ship owned by it, or any Environmental Incident;
(g)	any claim for breach of the ISM Code or the ISPS Code being made against the relevant Security Party, the relevant Approved Manager or otherwise in connection with the Ship owned by it; or
(h)	any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;
	and the relevant Security Party shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the relevant Security Party’s, the relevant Approved Manager’s or any other person’s response to any of those events or matters.

14.13	Restrictions on chartering, appointment of managers etc. The relevant Security Party shall not:
(a)	let the Ship owned by it on demise charter for any period;
(b)	enter into any charter in relation to the Ship owned by it under which more than two (2) months’ hire (or the equivalent) is payable in advance;
(c)	charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;
(d)	appoint a manager of the Ship owned by it other than an Approved Manager or agree to any material alteration to the terms of the Approved Management Agreement; or
(e)	put the Ship owned by it into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any Security Interest on that Ship or the Earnings for the cost of such work or for any other reason.
14.14	Notice of Mortgage. The relevant Security Party shall keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board that Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that such Ship is mortgaged by that Security Party to the Security Trustee.
14.15	Intentionally Omitted.

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14.16	ISPS Code. The relevant Security Party shall comply with the ISPS Code and in particular, without limitation, shall:
(a)	procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and
(b)	maintain for the Ship an ISSC; and
(c)	notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
15	COLLATERAL MAINTENANCE RATIO
15.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 15 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing.

15.2	Collateral Maintenance Ratio. If, at any time, the Agent notifies the Borrower that:
(a)	the aggregate Fair Market Value of the Ships; plus
(b)	the net realizable value of any additional Collateral previously provided under this Clause 15,
	is below 150 percent of the Loan (such ratio being the “Collateral Maintenance Ratio”), the Agent (acting upon the instruction of the Majority Lenders) shall have the right to require the Borrower to comply with the requirements of Clause 15.3.
15.3	Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.2, the Borrower shall, within one (1) month after the date on which the Agent’s notice is served, either:
(a)	provide, or ensure that a third party provides, additional Collateral which, in the opinion of the Majority Lenders, has a net realizable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorization of the Majority Lenders, approve or require; or
(b)	prepay the Loan in such amount as will eliminate the shortfall.
15.4	Value of additional vessel security. The net realizable value of any additional Collateral which is provided under Clause 15.3 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the definition of Fair Market Value.
15.5	Valuations binding. Any valuation under Clause 15.3 or 15.4 shall be binding and conclusive as regards the Borrower and the Lenders, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Ship.
15.6	Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker or other expert acting under Clause 15.4 with any information which the Agent or the Approved Broker or other expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.
15.7	Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 21.2, 21.3 and 22.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or other expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.
15.8	Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.3(b).

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16	GUARANTEE
16.1	Guarantee and indemnity. In order to induce the Lenders to make the Loan to the Borrower, and to induce the Swap Banks to enter into Designated Transactions with the Borrower, each Guarantor irrevocably and unconditionally jointly and severally:
(a)	guarantees, as a primary obligor and not as merely as a surety, to each Creditor Party, the punctual payment and performance by the Borrower when due, whether at stated maturity, by acceleration or otherwise, of all Secured Liabilities of the Borrower, whether for principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Obligations”);
(b)	undertakes with each Creditor Party that whenever the Borrower does not pay any amount when due under or in connection with any of the Borrower’s Secured Liabilities, such Guarantor shall immediately on demand pay that amount as if it were the primary obligor; and
(c)	indemnifies each Creditor Party immediately on demand against any cost, loss or liability suffered or incurred by that Creditor Party (i) if any Guaranteed Obligation is or becomes unenforceable, invalid or illegal or (ii) by operation of law as a consequence of the transactions contemplated by the Finance Documents and the Master Agreements.  The amount of the cost, loss or liability shall be equal to the amount which that Creditor Party would otherwise have been entitled to recover.
16.2	Continuing guarantee. This guarantee:
(a)	is a continuing guarantee;
(b)	is joint and several with any other guarantee given in respect of the Guaranteed Obligations and shall not in any way be prejudiced by any other guarantee or security now or subsequently held by any Creditor Party in respect of the Guaranteed Obligations;
(c)	shall remain in full force and effect until the later of the termination of the Total Commitments and the payment and performance in full of the Guaranteed Obligations and all other amounts payable hereunder regardless of any intermediate payment or discharge in whole or in part; and
(d)	shall be binding upon each Guarantor, its successors and permitted assigns.

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16.3	Performance of Guaranteed Obligations; obligations pari passu.
(a)	Each Guarantor agrees that the Guaranteed Obligations will be performed and paid strictly in accordance with the terms of the relevant Finance Document or Master Agreement regardless of any law or regulation or order of any court:

(i)	affecting (A) any term of such Finance Document or Master Agreement or the rights of any of the Creditor Parties with respect thereto or (B) the Borrower’s ability or obligation to make or render, or right of any Creditor Party to receive, any payments or performance due thereunder; or
(ii)	which might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower.

(b)	The obligations of each Guarantor under this guarantee shall rank pari passu with all other unsecured obligations of such Guarantor.
16.4	Reinstatement. If any payment of any of the Guaranteed Obligations is rescinded, discharged, avoided or reduced or must otherwise be returned by a Creditor Party or any other person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Security Party or otherwise:
(a)	this guarantee shall continue to be effective or be reinstated, and the liability of each Guarantor hereunder shall continue or be reinstated, as the case may be, as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Creditor Party shall be entitled to recover the value or amount of that payment from each Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.
16.5	Liability absolute and unconditional. The obligations of each Guarantor under this Clause 16 shall be irrevocable, absolute and unconditional and shall not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 16, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:
(a)	any time, waiver or consent granted to, or composition with, any Security Party or other person;
(b)	the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;
(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;
(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure or status of a Security Party or any other person (including without limitation any change in the holding of such Security Party’s or other person’s Equity Interests);

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(e)	any amendment to or replacement of a Finance Document, a Master Agreement or any other document or security;
(f)	any unenforceability, illegality or invalidity of any obligation of any Security Party or any other person under any Finance Document, any Master Agreement or any other document or security;

(g)	any bankruptcy, insolvency or similar proceedings; or
(h)	any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Security Party.
16.6	Waiver of promptness, etc. Each of the Guarantors hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security Interest or any property subject thereto or exhaust any right or take any action against any Security Party or any other person or entity or any Collateral.
16.77	Waiver of revocation, etc. Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this guarantee.
16.8	Waiver of certain defenses. Each Guarantor hereby unconditionally and irrevocably waives:
(a)	any defense arising by reason of any claim or defense based upon an election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against the Borrower, any of the other Security Parties, any other guarantor or any other person or entity or any Collateral; and
(b)	any defense based on any right of set-off or counterclaim against or in respect of the obligations of such Guarantor hereunder.
16.9	Waiver of disclosure, etc. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Creditor Party to disclose to the Guarantors any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower, any other Security Party or any of their respective subsidiaries now or hereafter known by any Creditor Party.
16.10	Immediate recourse. Each Guarantor waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 16. This waiver applies irrespective of any law or any provision of a Finance Document or Master Agreement to the contrary.

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16.11

Acknowledgment of benefits. Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and that the waivers set forth in this Clause 16 are knowingly made in contemplation of such benefits.

16.12

Independent obligations. The obligations of each Guarantor under or in respect of this guarantee are independent of the Guaranteed Obligations or any other obligations of the Borrower or any other Security Party under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this guarantee irrespective of whether any action is brought against the Borrower or any other Security Party or whether the Borrower or any other Security Party is joined in any such action or actions.

16.13	Deferral of Guarantors’ rights. Until the Guaranteed Obligations have been irrevocably paid and performed in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
(a)	to be indemnified by another Security Party;
(b)	to claim any contribution from any other guarantor of any Security Party’s obligations under the Finance Documents; and/or
(c)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents, the Master Agreements or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents or the Master Agreements by any Creditor Party.
16.14	Limitation of liability. Each of the Guarantors and the Creditor Parties hereby confirms that it is its intention that the Guaranteed Obligations not constitute a fraudulent transfer or conveyance for purposes of the United States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, each of the Guarantors and the Creditor Parties hereby irrevocably agrees that the Guaranteed Obligations guaranteed by each Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
16.15	Reliance of Creditor Parties. Each of the Creditor Parties has entered into this Agreement in reliance upon, among other things, this guarantee.
17	PAYMENTS AND CALCULATIONS
17.1	Currency and method of payments. All payments to be made by the Lenders or by the Security Parties under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:
(a)	by not later than 11:00 a.m. (New York City time) on the due date;
(b)	in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

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(c)	in the case of an amount payable by a Lender to the Agent or by a Security Party to the Agent or any Lender, to Account No. 300030007278532 maintained at Nordea Bank Finland PLC, New York Branch, located at 437 Madison Avenue, New York, New York 10022, USA, ABA Number: 026010786, SWIFT: NDEAUS3NXXX, Attention: Credit Administration, re: Scorpio Tankers, or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and
(d)	in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.
17.2	Payment on non-Business Day. If any payment by a Security Party under a Finance Document would otherwise fall due on a day which is not a Business Day:
(a)	the due date shall be extended to the next succeeding Business Day; or
(b)	if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;
	and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
17.3	Basis for calculation of periodic payments. All interest, commitment fees and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
17.4	Distribution of payments to Creditor Parties. Subject to Clauses 17.5, 17.6 and 17.7:
(a)	any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, a Swap Counterparty or the Security Trustee shall be made available by the Agent to that Lender, that Swap Counterparty or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender and the Swap Counterparty or the Security Trustee may have notified to the Agent not less than five (5) Business Days previously; and
(b)	amounts to be applied in satisfying amounts of a particular category which are due to the Lenders and/or the Swap Counterparties generally shall be distributed by the Agent to each Lender and each Swap Counterparty pro rata to the amount in that category which is due to it.
17.5	Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or a Swap Counterparty, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Counterparty under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Counterparty to pay on demand.
17.6	Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or that Swap Counterparty until the Agent has satisfied itself that it has received that sum.

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17.7	Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender or a Swap Counterparty, without first having received that sum, the Borrower or (as the case may be) the Lender or the Swap Counterparty concerned shall, on demand:
(a)	refund the sum in full to the Agent; and
(b)	pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.
17.8	Agent may assume receipt. Clause 17.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.
17.9	Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any other Security Party.
17.10	Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any other Security Party.
17.11	Accounts prima facie evidence. If any accounts maintained under Clauses 17.9 and 17.10 show an amount to be owing by the Borrower or any other Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.
18	APPLICATION OF RECEIPTS
18.1	Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:
(a)	FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii), (iii), (iv) and (v) (including, but without limitation, all amounts payable by the Borrower under Clauses 21, 22 and 23 of this Agreement or by the Borrower or any other Security Party under any corresponding or similar provision in any other Finance Document);

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(ii)	second, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents;
(iii)	third, in or towards satisfaction pro rata of any and all amounts of principal payable to the Lenders under this Agreement;
(iv)	fourth, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to each Swap Counterparty (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 18); and
(v)	fifth, in or towards satisfaction of the Swap Exposure of each Swap Counterparty (calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

(b)	SECOND: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement but which the Agent, by notice to the Borrower, the other Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 18.1(a); and
(c)	THIRD: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.
18.2	Variation of order of application. The Agent may, with the authorization of the Majority Lenders and the Swap Counterparties, by notice to the Borrower, the other Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 18.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.
18.3	Notice of variation of order of application. The Agent may give notices under Clause 18.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
18.4	Appropriation rights overridden. This Clause 18 and any notice which the Agent gives under Clause 18.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any other Security Party.
18.5	Payments in excess of Contribution.
(a)	If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, counterclaim or otherwise) in excess of its Contribution, such Lender shall forthwith purchase from the other Lenders such participation in their respective Contributions as shall be necessary to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.

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(b)	The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Clause 18.5 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
(c)	Notwithstanding paragraphs (a) and (b) of this Clause 18.5, any Lender which shall have commenced or joined (as a plaintiff) in an action or proceeding in any court to recover sums due to it under any Finance Document and pursuant to a judgment obtained therein or a settlement or compromise of that action or proceeding shall have received any amount, such Lender shall not be required to share any proportion of that amount with a Lender which has the legal right to, but does not, join such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in the same or another court.
(d)	Each Lender exercising or contemplating exercising any rights giving rise to a receipt or receiving any payment of the type referred to in this Clause 18.5 or instituting legal proceedings to recover sums owing to it under this Agreement shall, as soon as reasonably practicable thereafter, give notice thereof to the Agent who shall give notice to the other Lenders.
19	APPLICATION OF EARNINGS, SALE PROCEEDS AND INSURANCE PROCEEDS
19.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 19 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing.
19.2	Payment of Earnings, sale proceeds and insurance proceeds. The Borrower and each of the Guarantors, as the case may be, undertakes with each Creditor Party to ensure that:
(a)	subject only to the provisions of any Charter Assignment or Earnings Assignment, all of the Earnings of each Ship are paid to the Earnings Account for such Ship; and
(b)	if following the sale or Total Loss of a Ship the Borrower elects to proceed under Clause 8.8(b), all sale proceeds and insurance proceeds are paid to the Retention Account.
19.3	Intentionally omitted.
19.4	Intentionally omitted.

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19.5	Application of funds in Retention Account. Until an Event of Default or a Potential Event of Default occurs, the Agent shall apply any funds in the Retention Account as required by:
(a)	Clause 8.8(c) in the event a Replacement Ship is purchased within the time period permitted by such clause; or
(b)	Clause 8.8(d) in the event a Replacement Ship is not purchased pursuant to Clause 8.8(c).
19.6	Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Retention Account.
19.7	No release of accrued interest. Interest accruing under Clause 19.6 shall be credited to the Retention Account but shall not be released to the Borrower until the end of the Security Period.
19.8	Location of accounts. The Borrower and each of the Guarantors, as the case may be, shall promptly:
(a)	comply with any requirement of the Agent as to the location or re-location of any Earnings Account and the Retention Account (or any of them); and
(b)	execute an Earnings Account Pledge, a Retention Account Pledge and/or any other documents which the Agent specifies to create or maintain in favor of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) any Earnings Account and the Retention Account (or any of them).
19.9	Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Retention Account with prior notice in order to discharge any amount due and payable under Clause 21 or 22 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 21 or 22.
19.10	Borrower’s obligations unaffected. The provisions of this Clause 19 (as distinct from a distribution effected under Clause 19.5) do not affect:
(a)	the liability of the Borrower to make payments of principal and interest on the due dates; or
(b)	any other liability or obligation of the Borrower or any other Security Party under any Finance Document.
20	EVENTS OF DEFAULT
20.1	Events of Default. An Event of Default occurs if:
(a)	the Borrower or any other Security Party fails to pay when due any principal payable under a Finance Document or under any document relating to a Finance Document or, in the case of interest and other sums payable on demand, within five (5) Business Days after the date when first demanded; or

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(b)	any breach occurs of Clause 9.2(a), 11.2(b), 11.2(e) or 11.2(o); or
(c)	any breach by the Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or
(d)	subject to any applicable grace period specified in the Finance Document, any breach by the Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or
(e)	any representation, warranty or statement made or repeated by, or by an officer or director of, the Borrower or another Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or
(f)	an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred on the part of a Security Party under any contract or agreement in excess of $5,000,000 (other than the Finance Documents) to which such Security Party is a party, and such event of default has not been cured within any applicable grace period;
(g)	any Financial Indebtedness of a Security Party in excess of $5,000,000 is not paid when due or within any applicable grace period or, only in the case of sums payable on demand, when first demanded, except for any such Financial Indebtedness which is being contested by such Security Party in good faith and through appropriate proceedings and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of the Ship; or
(h)	any Security Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or
(i)	any proceeding shall be instituted by or against any Security Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or
(j)	all or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, any Security Party are seized, nationalized, expropriated or compulsorily acquired by or under authority of any government; or

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(k)	a creditor attaches or takes possession of, or a distress, execution, sequestration or process (each an “action”) is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues (the “assets”) of any Security Party in relation to a claim by such creditor which, in the reasonable opinion of the Majority Lenders, is likely to materially and adversely affect the ability of such Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any Finance Document to which it is a party and such Security Party does not procure that such action is lifted, released or expunged within 20 Business Days of such action being (i) instituted and (ii) notified to such Security Party; or
(l)	any Security Party ceases or suspends or threatens to cease or suspend the carrying on of its business, or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement, except in the case of a sale or a proposed sale of a Ship by the Borrower that owns such Ship; or
(m)	a Ship becomes a Total Loss and insurance proceeds are not collected or received by the Security Trustee from the underwriters within 120 days of the Total Loss Date; or
(n)	an ERISA Funding Event or an ERISA Termination Event has occurred and is continuing; or
(o)	it becomes unlawful or impossible:

(i)	for the Borrower or any other Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document;
(ii)	for the Agent, the Security Trustee, the Lenders or the Swap Banks to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(p)	any consent necessary to enable a Guarantor to own, operate or charter the Ship owned by it or to enable any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
(q)	any material provision of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or
(r)	an Event of Default as defined in section 14 of a Master Agreement occurs; or
(s)	any event occurs or any circumstance arises or develops including, without limitation:

(i)	a change in the financial position, of any Security Party; or
(ii)	any accident or other event involving a Ship;

and it becomes evident that the Security Parties are, or will later become, unable to discharge their liabilities under the Finance Documents as they fall due; or

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(t)	there occurs or develops a change in the financial position, state of affairs or prospects of a Security Party which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on such Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due.
20.2	Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:
(a)	the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i)	serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or
(ii)	serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand, provided that in the case of an Event of Default under either of Clauses 20.1(h) or (i), the Loan and all accrued interest and other amounts accrued or owing hereunder shall be deemed immediately due and payable without notice or demand therefor; and/or
(iii)	take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b)	the Security Trustee may, and if so instructed by the Agent, acting with the authorization of the Majority Lenders, the Security Trustee shall, take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders and/or the Swap Counterparties are entitled to take under any Finance Document or any applicable law.
20.3	Termination of Commitments. On the service of a notice under Clause 20.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall be cancelled.
20.4	Acceleration of Loan. On the service of a notice under Clause 20.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any other Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand, and the Security Trustee shall forthwith be entitled to enforce the Security Interests created by this Agreement and any other Finance Document in any manner available to it and in such sequence as the Security Trustee may, in its absolute discretion, determine.
20.5	Multiple notices; action without notice. The Agent may serve notices under Clauses 20.2(a)(i) and (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 20.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

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20.6	Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, each Swap Counterparty, the Security Trustee and each Security Party a copy of the text of any notice which the Agent serves on the Borrower under Clause 20.2. Such notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any other Security Party with any form of claim or defense.
20.7	Creditor Party rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or Swap Counterparties under a Finance Document, a Master Agreement or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.
20.8	Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to any Security Party:
(a)	for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
(b)	as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realized from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,
	provided that nothing in this Clause 20.8 shall exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence, dishonesty or the willful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
20.9	Position of Swap Counterparties. Neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 20, to have any regard to the requirements of a Swap Counterparty except to the extent that such Swap Counterparty is also a Lender.
21	FEES AND EXPENSES
21.1	Arrangement, commitment, agency fees. The Borrower shall pay to the Agent:
(a)	an arrangement fee and a coordination fee as required by the Fee Letter for distribution among the Lenders in the proportions agreed by the Agent and the Lead Arrangers;
(b)	a commitment fee as required by the Fee Letter for distribution among the Lenders pro rata to their Commitments; and
(c)	an annual agency fee as required by the Fee Letter.
21.2	Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, including, without limitation, the reasonable fees and disbursements of a Creditor Party’s legal counsel and any local counsel retained by them.

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21.3	Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned, the amount of all expenses incurred by a Creditor Party in connection with:
(a)	any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;
(b)	any consent or waiver by the Lenders, the Swap Banks, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;
(c)	the valuation of any Collateral provided or offered under Clause 15 or any other matter relating to such Collateral; or
(d)	any step taken by a Lender or a Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
	There shall be recoverable under paragraph (d) the full amount of all reasonable legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
21.4	Intentionally omitted.
21.5	Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.
21.6	Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
22	INDEMNITIES
22.1	Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:
(a)	an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

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(b)	the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
(c)	any failure (for whatever reason) by a Security Party to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid on the amount concerned under Clause 7); or
(d)	the occurrence of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 20.
	It is understood that the indemnities provided in this Clause 22.1 shall not apply to any claim cost or expense which is a tax levied by a taxing authority on the indemnified party (which taxes are subject to indemnity solely as provided in Clause 23 below) but shall apply to any other costs associated with any tax which is not a Non-indemnified Tax.
22.2	Breakage costs. Without limiting its generality, Clause 22.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by a Lender:
(a)	in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and
(b)	in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.
22.3	Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with:
(a)	any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; or
(b)	any other Pertinent Matter,
	other than claims, expenses, liabilities and losses which are shown to have been caused by the gross negligence, dishonesty or willful misconduct of the officers or employees of the Creditor Party concerned.
	Without prejudice to its generality, this Clause 22.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

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22.4	Currency indemnity. If any sum due from the Borrower or any other Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:
(a)	making or lodging any claim or proof against the Borrower or any other Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
(b)	obtaining an order or judgment from any court or other tribunal; or
(c)	enforcing any such order or judgment,
	the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.
	In this Clause 22.4, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
	This Clause 22.4 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.
22.5	Application to Master Agreements. For the avoidance of doubt, Clause 22.4 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of that Master Agreement shall apply.
22.6	Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 22 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
22.7	Sums deemed due to a Lender. For the purposes of this Clause 22, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
23	NO SET-OFF OR TAX DEDUCTION
23.1	No deductions. All amounts due from a Security Party under a Finance Document shall be paid:
(a)	without any form of set-off, cross-claim or condition; and

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(b)	free and clear of any tax deduction except a tax deduction which such Security Party is required by law to make.
23.2	Grossing-up for taxes. If a Security Party is required by law to make a tax deduction from any payment:
(a)	such Security Party shall notify the Agent as soon as it becomes aware of the requirement;
(b)	such Security Party shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and
(c)	except if the deduction is for collection or payment of a Non-indemnified Tax of a Creditor Party, the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.
23.3	Evidence of payment of taxes. Within one (1) month after making any tax deduction, the relevant Security Party shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
23.4	Exclusion of tax on overall net income. In this Clause 23 “tax deduction” means any deduction or withholding for or on account of any present or future tax except a Non-indemnified Tax.
23.5	Indemnity for taxes. The Borrower hereby indemnifies and agrees to hold each Creditor Party harmless from and against all taxes other than Non-indemnified Taxes (including, without limitation, taxes and other taxes imposed on any amounts payable under this Clause 23.5) paid or payable by such person, whether or not such taxes or other taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which such Creditor Party makes written demand therefore specifying in reasonable detail the nature and amount of such taxes or other taxes.
23.6	Exclusion from indemnity and gross-up for taxes. The Borrower shall not be required to indemnify any Creditor Party pursuant to Clause 23.5, or pay any additional amounts to any Creditor Party pursuant to Clause 23.2, to the extent that:
(a)	the obligation to withhold amounts for taxes existed on the date such Lender (other than an original Lender) became a party to this Agreement or, with respect to payments to a New Lending Office, the date such Lender designated such New Lending Office with respect to a Loan; provided that this clause (a) shall not apply to the extent the indemnity payment or additional amounts any transferee, or Lender (or transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (a)) do not exceed the indemnity payment or additional amounts that the person making the transfer, or Lender (or transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such transfer or designation; or
(b)	the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Lender to comply with Clause 23.7 below.

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23.7	Delivery of tax forms.
(a)	Each Lender or transferee that is organized under the laws of a jurisdiction outside the United States (a “Non-U.S. Lender”) shall deliver to the Agent and the Borrower two properly completed and duly executed copies of either U.S. Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY or, upon request of the Borrower or the Agent, any subsequent versions thereof or successors thereto, in each case claiming complete exemption from, or a reduced rate of, U.S. Federal withholding tax with respect to payments of interest hereunder.
(b)	In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall provide to the Agent and the Borrower a properly completed form W-8BEN and certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly notify the Agent in the event any representation in such certificate is no longer accurate.
(c)	Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a “New Lending Office”). In addition, each Non-U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from the Agent or Borrower.
(d)	Notwithstanding any other provision of this Clause 23.7, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Clause 23.7 that such Non-U.S. Lender is not legally able to deliver.
23.8	Application to Master Agreements. For the avoidance of doubt, Clause 23 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of that Master Agreement shall apply.
24	ILLEGALITY, ETC
24.1	Illegality. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:
(a)	unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)	contrary to, or inconsistent with, any regulation,
	for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

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24.2	Notification of illegality. The Agent shall promptly notify the Borrower, the other Security Parties, the Security Trustee and the other Lenders of the notice under Clause 24.1 which the Agent receives from the Notifying Lender.
24.3	Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 24.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 24.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8, without penalty, premium or breakage costs.
24.4	Mitigation. If circumstances arise which would result in a notification under Clause 24.1 then, without in any way limiting the rights of the Notifying Lender under Clause 24.3, the Notifying Lender shall use reasonable endeavors to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:
(a)	have an adverse effect on its business, operations or financial condition; or
(b)	involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or
(c)	involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.
25	INCREASED COSTS
25.1	Increased costs. This Clause 25 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:
(a)	the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a Non-indemnified Tax); or
(b)	complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,
	the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.
	Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder, are deemed to have been introduced or adopted after the date hereof, regardless of the date enacted or adopted.
25.2	Meaning of “increased costs”. In this Clause 25, “increased costs” means, in relation to a Notifying Lender:

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(a)	an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;
(b)	a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;
(c)	an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or
(d)	a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;
(e)	but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 23 or an item arising directly out of the implementation or application of or compliance with Basel III or any other law or regulation which implements Basel III (whether such implementation, application or compliance is by a government, regulator, Creditor Party or any of its affiliates).
	For the purposes of this Clause 25.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.
25.3	Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the other Security Parties of the notice which the Agent received from the Notifying Lender under Clause 25.1.
25.4	Payment of increased costs. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
25.5	Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 25.4, the Borrower may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.
25.6	Prepayment; termination of Commitment. A notice under Clause 25.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:
(a)	on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b)	on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.
25.7	Application of prepayment. Clause 8 shall apply in relation to the prepayment.

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26	SET-OFF
26.1	Application of credit balances. Each Creditor Party may, upon the occurrence and during the continuance of an Event of Default, without prior notice:
(a)	apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and
(b)	for that purpose:

(i)	break, or alter the maturity of, all or any part of a deposit of the Borrower;
(ii)	convert or translate all or any part of a deposit or other credit balance into Dollars; and
(iii)	enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

26.2	Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 26.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).
26.3	Sums deemed due to a Lender. For the purposes of this Clause 26, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.
26.4	No Security Interest. This Clause 26 gives the Creditor Parties a contractual right of set-off only, and does not create any Security Interest over any credit balance of the Borrower.
27	TRANSFERS AND CHANGES IN LENDING OFFICES
27.1	Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of the Majority Lenders, transfer any of its rights, liabilities or obligations under any Finance Document.
27.2	Transfer by a Lender. Subject to Clause 27.4, a Lender (the “Transferor Lender”) may at any time, without needing the consent of the Borrower or any other Security Party, cause:

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(a)	its rights in respect of all or part of its Contribution; or
(b)	its obligations in respect of all or part of its Commitment; or
(c)	a combination of (a) and (b),
	to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution reasonably acceptable to the Borrower (a “Transferee Lender”) which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets in the shipping industry and is not an Affiliate of the Borrower by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.
	Notwithstanding the foregoing, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee shall be determined in accordance with Clause 31.
27.3	Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
(a)	sign the Transfer Certificate on behalf of itself, the Borrower, the other Security Parties, the Security Trustee, each of the other Lenders and each of the Swap Banks;
(b)	on behalf of the Transferee Lender, send to the Borrower and each other Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;
(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b),
	but the Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Transferor Lender and the Transferee Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations to the transfer to that Transferee Lender.
27.4	Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date, provided that it is signed by the Agent under Clause 27.3 on or before that date.
27.5	No transfer without Transfer Certificate. Except as provided in Clause 27.17, no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any other Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
27.6	Lender re-organization; waiver of Transfer Certificate. If a Lender enters into any merger, de-merger or other reorganization as a result of which all its rights or obligations vest in a successor, the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

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27.7	Effect of Transfer Certificate. The effect of a Transfer Certificate is as follows:
(a)	to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any other Security Party had against the Transferor Lender;
(b)	the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;
(c)	the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;
(d)	the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;
(e)	any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any other Security Party against the Transferor Lender had not existed;
(f)	the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 21, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and
(g)	in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.
	The rights and equities of the Borrower or any other Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.
27.8	Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 27.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least three (3) Business Days’ prior notice.

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27.9	Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.
27.10	Authorization of Agent to sign Transfer Certificates. The Borrower, the Security Trustee, each Lender and each Swap Bank irrevocably authorizes the Agent to sign Transfer Certificates on its behalf.
27.11	Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $5,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.
27.12	Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any other Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.
27.13	Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any other Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.
27.14	Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:
(a)	the date on which the Agent receives the notice; and
(b)	the date, if any, specified in the notice as the date on which the change will come into effect.
27.15	Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.
27.16	Intentionally omitted.
27.17	Security over Lenders’ rights. In addition to the other rights provided to Lenders under this Clause 27, each Lender may without consulting with or obtaining consent from the Borrower or any other Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:
(a)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

(b)	in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;
	except that no such charge, assignment or Security Interest shall:

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(i)	release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or
(ii)	require any payments to be made by the Borrower or any other Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

28	VARIATIONS AND WAIVERS
28.1	Variations, waivers etc. by Majority Lenders. Subject to Clause 28.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
28.2	Variations, waivers etc. requiring agreement of all Lenders. As regards the following, Clause 28.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:
(a)	a reduction in the Margin;
(b)	a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(c)	a change to the definition of “Majority Lenders”;
(d)	a change to Clause 3 or this Clause 28;
(e)	any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and
(f)	any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.
28.3	Increase in Commitments. A document shall be effective to increase a Lender’s Commitment only if such document is executed and delivered by the Borrower and such Lender.

28.4

Variations, waivers etc. relating to the Servicing Banks. An amendment or waiver that relates to the rights or obligations of the Agent or the Security Trustee under Clause 31 may not be effected without the consent of the Agent or the Security Trustee.

28.5

Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 28.1, 28.2, 28.3 or 28.4, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

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(a)	a provision of this Agreement or another Finance Document; or
(b)	an Event of Default; or
(c)	a breach by the Borrower or another Security Party of an obligation under a Finance Document or the general law; or
(d)	any right or remedy conferred by any Finance Document or by the general law,
	and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
29	NOTICES
29.1	General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, electronic mail (“Email”) or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
29.2	Addresses for communications. A notice by letter or fax shall be sent:

(a)	to the Borrower	Scorpio Tankers Inc.
	or any Guarantor:	9, Boulevard Charles III
		Monaco 98000
		Attention: Luca Forgione
	with a copy to:	150 E. 58th Street
		New York, New York 10155
		Attention: Chief Financial Officer
		Fax No: +212-542-1618

(b)	to a Lender:	At the address below its name in Schedule 1 or in the relevant Transfer Certificate or Lender Accession Agreement.
(c)	to a Swap Bank	At the address below its name in Schedule 2 or in the relevant Swap Bank Accession Agreement.
(d)	to the Agent:	Nordea Bank Finland PLC, New York Branch
		437 Madison Avenue
		New York, New York 10022
		Attention: Loan Administration
		Fax No: +212-750-9188
(e)	to the Security Trustee:	Nordea Bank Finland PLC, New York Branch
		437 Madison Avenue
		New York, New York 10022
		Attention: Loan Administration
		Fax No: +212-750-9188

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	or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Lenders, the Swap Banks and the Security Parties.
29.3	Effective date of notices. Subject to Clauses 29.4 and 29.5:
(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;
(b)	a notice which is sent by Email shall be deemed to be served, and shall take effect, at the time when it is actually received in readable form; and
(c)	a notice which is sent by fax shall be deemed to be served, and shall take effect, two (2) hours after its transmission is completed.
29.4	Service outside business hours. However, if under Clause 29.3 a notice would be deemed to be served:
(a)	on a day which is not a business day in the place of receipt; or
(b)	on such a business day, but after 5:00 p.m. local time,
	the notice shall (subject to Clause 29.5) be deemed to be served, and shall take effect, at 9:00 a.m. on the next day which is such a business day.
29.5	Illegible notices. Clauses 29.3 and 29.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

29.6	Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
(a)	the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
(b)	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
29.7	Electronic communication between the Agent and a Lender or a Swap Bank. Any communication to be made between the Agent and a Lender or a Swap Bank under or in connection with the Finance Documents may be made by Email or other electronic means, if the Agent and the relevant Lender or Swap Bank:

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(a)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(b)	notify each other in writing of their Email address and/or any other information required to enable the sending and receipt of information by that means; and
(c)	notify each other of any change to their respective Email addresses or any other such information supplied to them.
	Any electronic communication made between the Agent and a Lender or a Swap Bank will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender or a Swap Bank to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose.
29.8	English language. Any notice under or in connection with a Finance Document shall be in English.
29.9	Meaning of “notice”. In this Clause 29, “notice” includes any demand, consent, authorization, approval, instruction, waiver or other communication.
30	SUPPLEMENTAL
30.1	Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:
(a)	cumulative;
(b)	may be exercised as often as appears expedient; and
(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

30.2	Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
30.3	Counterparts. A Finance Document may be executed in any number of counterparts.
30.4	Binding Effect. This Agreement shall become effective on the Effective Date and thereafter shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.
31	THE SERVICING BANKS
31.1	Appointment and Granting.
(a)	The Agent. Each of the Lenders and the Swap Banks appoints and authorizes (with a right of revocation) the Agent to act as its agent hereunder and under any of the other Finance Documents with such powers as are specifically delegated to the Agent by the terms of this Agreement and of any of the other Finance Documents, together with such other powers as are reasonably incidental thereto.
(b)	The Security Trustee.

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(i)

Authorization of Security Trustee. Each of the Lenders, the Swap Banks and the Agent appoints and authorizes (with a right of revocation) the Security Trustee to act as security trustee hereunder and under the other Finance Documents (other than the Notes) with such powers as are specifically delegated to the Security Trustee by the terms of this Agreement and such other Finance Documents, together with such other powers as are reasonably incidental thereto.

(ii)

Granting Clause. To secure the payment of all sums of money from time to time owing (i) to the Lenders under the Finance Documents, and (ii) to the Swap Banks under the Master Agreements, and the performance of the covenants of the Borrower and any other Security Party herein and therein contained, and in consideration of the premises and of the covenants herein contained and of the extensions of credit by the Lenders, the Security Trustee does hereby declare that it will hold as such trustee in trust for the benefit of the Lenders, the Agent and the Swap Banks, from and after the execution and delivery thereof, all of its right, title and interest as mortgagee in, to and under the Mortgages and its right, title and interest as assignee and secured party under the other Finance Documents (the right, title and interest of the Security Trustee in and to the property, rights and privileges described above, from and after the execution and delivery thereof, and all property hereafter specifically subjected to the Security Interest of the indenture created hereby and by the Finance Documents by any amendment hereto or thereto are herein collectively called the “Estate”); TO HAVE AND TO HOLD the Estate unto the Security Trustee and its successors and assigns forever, BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the Lenders, the Agent and the Swap Banks and their respective successors and assigns without any priority of any one over any other, UPON THE CONDITION that, unless and until an Event of Default under this Agreement shall have occurred and be continuing, the Guarantors shall be permitted, to the exclusion of the Security Trustee, to possess and use the Ships. IT IS HEREBY COVENANTED, DECLARED AND AGREED that all property subject or to become subject hereto is to be held, subject to the further covenants, conditions, uses and trusts hereinafter set forth, and each Security Party, for itself and its respective successors and assigns, hereby covenants and agrees to and with the Security Trustee and its successors in said trust, for the equal and proportionate benefit and security of the Lenders, the Agent and the Swap Banks as hereinafter set forth.

(iii) Acceptance of Trusts. The Security Trustee hereby accepts the trusts imposed upon it as Security Trustee by this Agreement, and the Security Trustee covenants and agrees to perform the same as herein expressed and agrees to receive and disburse all monies constituting part of the Estate in accordance with the terms hereof.

31.2	Scope of Duties. Neither the Agent nor the Security Trustee (which terms as used in this sentence and in Clause 31.5 hereof shall include reference to their respective affiliates and their own respective and their respective affiliates’ officers, directors, employees, agents and attorneys-in-fact):
(a)	shall have any duties or responsibilities except those expressly set forth in this Agreement and in any of the Finance Documents, and shall not by reason of this Agreement or any of the Finance Documents be (except, with respect to the Security Trustee, as specifically stated to the contrary in this Agreement) a trustee for a Lender or a Swap Bank;
(b)	shall be responsible to the Lenders or the Swap Banks for any recitals, statements, representations or warranties contained in this Agreement or in any of the Finance Documents, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any of the other Finance Documents, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any of the other Finance Documents or any other document referred to or provided for herein or therein or for any failure by a Security Party or any other person to perform any of its obligations hereunder or thereunder or for the location, condition or value of any property covered by any Security Interest under any of the Finance Documents or for the creation, perfection or priority of any such Security Interest;
(c)	shall be required to initiate or conduct any litigation or collection proceedings hereunder or under any of the Finance Documents unless expressly instructed to do so in writing by the Majority Lenders; or
(d)	shall be responsible for any action taken or omitted to be taken by it hereunder or under any of the Finance Documents or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct.  Each of the Security Trustee and the Agent may employ agents and attorneys-in-fact and neither the Security Trustee nor the Agent shall be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.  Each of the Security Trustee and the Agent may deem and treat the payee of a Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent, together with the written consent of the Borrower to such assignment or transfer.

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31.3

Reliance. Each of the Security Trustee and the Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telefacsimile, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper person or persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Security Trustee or the Agent, as the case may be. As to any matters not expressly provided for by this Agreement or any of the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions signed by the Majority Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.

31.4

Knowledge. Neither the Security Trustee nor the Agent shall be deemed to have knowledge or notice of the occurrence of a Potential Event of Default or Event of Default (other than, in the case of the Agent, the non-payment of principal of or interest on the Loan) unless each of the Security Trustee and the Agent has received notice from a Lender or the Borrower specifying such Potential Event of Default or Event of Default and stating that such notice is a “Notice of Default”. If the Agent receives such a notice of the occurrence of such Potential Event of Default or Event of Default, the Agent shall give prompt notice thereof to the Security Trustee, the Swap Banks and the Lenders (and shall give each Lender prompt notice of each such non-payment). Subject to Clause 31.8 hereof, the Security Trustee and the Agent shall take such action with respect to such Potential Event of Default or Event of Default or other event as shall be directed by the Majority Lenders, except that, unless and until the Security Trustee and the Agent shall have received such directions, each of the Security Trustee and the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Event of Default or Event of Default or other event as it shall deem advisable in the best interest of the Lenders and the Swap Banks.

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31.5 Security Trustee and Agent as Lenders. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee or Agent, as the case may be) in its individual capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Security Trustee or the Agent, as the case may be, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include each of the Security Trustee and the Agent in their respective individual capacities. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee and Agent, as the case may be) and their respective affiliates may (without having to account therefor to a Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrower and any of its subsidiaries or affiliates as if it were not acting as the Security Trustee or the Agent, as the case may be, and each of the Security Trustee and the Agent and their respective affiliates may accept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

31.6

Indemnification of Security Trustee and Agent. The Lenders severally agree, ratably in accordance with the aggregate principal amount of each Lender’s Contribution in the Loan, to indemnify each of the Agent and the Security Trustee (to the extent not reimbursed under other provisions of this Agreement, but without limiting the obligations of the Borrower under said other provisions) for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Security Trustee or the Agent in any way relating to or arising out of this Agreement or any of the other Finance Documents or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby (including, without limitation, the costs and expenses which the Borrower is to pay hereunder, but excluding, unless an Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of their respective agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, except that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

31.7

Reliance on Security Trustee or Agent. Each Lender and each Swap Bank agrees that it has, independently and without reliance on the Security Trustee, the Agent or any other Lender or Swap Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and decision to enter into this Agreement and that it will, independently and without reliance upon the Security Trustee, the Agent or any other Lender or Swap Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the Finance Documents. None of the Security Trustee or the Agent shall be required to keep itself informed as to the performance or observance by the Borrower or the Guarantors of this Agreement or any of the Finance Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Borrower or any Guarantor. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders and/or the Swap Banks by the Security Trustee or the Agent hereunder, neither the Security Trustee nor the Agent shall have any duty or responsibility to provide a Lender or a Swap Bank with any credit or other information concerning the affairs, financial condition or business of the Borrower, any Guarantor or any subsidiaries or affiliates thereof which may come into the possession of the Security Trustee, the Agent or any of their respective affiliates.

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31.8 Actions by Security Trustee and Agent. Except for action expressly required of the Security Trustee or the Agent hereunder and under the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Clause 31.6 against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.

31.9

Resignation and Removal. Subject to the appointment and acceptance of a successor Security Trustee or Agent (as the case may be) as provided below, each of the Security Trustee and the Agent may resign at any time by giving notice thereof to the Lenders, the Swap Banks and the Borrower, and the Security Trustee or the Agent may be removed at any time with or without cause by the Majority Lenders by giving notice thereof to the Agent, the Security Trustee, the Lenders, the Swap Banks and the Borrower. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Security Trustee or Agent, as the case may be. If no successor Security Trustee or Agent, as the case may be, shall have been so appointed by the Lenders or, if appointed, shall not have accepted such appointment within 30 days after the retiring Security Trustee’s or Agent’s, as the case may be, giving of notice of resignation or the Majority Lenders’ removal of the retiring Security Trustee or Agent, as the case may be, then the retiring Security Trustee or Agent, as the case may be, may, on behalf of the Lenders and the Swap Banks, appoint a successor Security Trustee or Agent. Upon the acceptance of any appointment as Security Trustee or Agent hereunder by a successor Security Trustee or Agent, such successor Security Trustee or Agent, as the case may be, shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Security Trustee or Agent, as the case may be, and the retiring Security Trustee or Agent shall be discharged from its duties and obligations hereunder. After any retiring Security Trustee or Agent’s resignation or removal hereunder as Security Trustee or Agent, as the case may be, the provisions of this Clause 31 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Security Trustee or the Agent, as the case may be.

31.10

Release of Collateral. Without the prior written consent of the Majority Lenders and the Swap Banks, neither the Security Trustee nor the Agent will consent to any modification, supplement or waiver under any of the Finance Documents nor without the prior written consent of all of the Lenders and the Swap Banks release any Collateral or otherwise terminate any Security Interest under the Finance Documents, except that no such consent is required, and each of the Security Trustee and the Agent is authorized, to release any Security Interest covering property if the Secured Liabilities have been paid and performed in full or which is the subject of a disposition of property permitted hereunder or to which the Lenders have consented.

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32	LAW AND JURISDICTION
32.1	Governing law. THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN A FINANCE DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.
32.2	Consent to Jurisdiction.
(a)	Each of the Borrower and the Guarantors hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Finance Documents to which such Security Party is a party or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State Court or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b)	Nothing in this Clause 32.2 shall affect the right of a Creditor Party to bring any action or proceeding against a Security Party or its property in the courts of any other jurisdictions where such action or proceeding may be heard.
(c)	Each of the Borrower and the Guarantors hereby irrevocably and unconditionally waives to the fullest extent it may legally and effectively do so:

(i)

any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Finance Document to which it is a party in any New York State or Federal court and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court; and

(ii)

any immunity from suit, the jurisdiction of any court in which judicial proceedings may at any time be commenced with respect to this Agreement or any other Finance Document or from any legal process with respect to itself or its property (including without limitation attachment prior to judgment, attachment in aid of execution of judgment, set-off, execution of a judgment or any other legal process), and to the extent that in any such jurisdiction there may be attributed to such person such an immunity (whether or not claimed), such person hereby irrevocably agrees not to claim such immunity.

(d) Each of the Borrower and the Guarantors hereby agrees to appoint Seward & Kissel LLP, with offices currently located at One Battery Park Plaza, New York, New York 10004, Attention: Lawrence Rutkowski, as its designated agent for service of process for any action or proceeding arising out of or relating to this Agreement or any other Finance Document.  Each of the Borrower and the Guarantors also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to its address specified in Clause 29.2.  Each of the Borrower and the Guarantors also agrees that service of process may be made on it by any other method of service provided for under the applicable laws in effect in the State of New York.

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32.3	Creditor Party rights unaffected. Nothing in this Clause 32 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
32.4	Meaning of “proceedings”. In this Clause 32, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.
33	WAIVER OF JURY TRIAL
33.1	WAIVER. EACH OF THE BORROWER, THE GUARANTORS AND THE CREDITOR PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

34

PATRIOT ACT notice

34.1

PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrower and the Guarantors that pursuant to the requirements of the Patriot Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies each Security Party, which information includes the name and address of each Security Party and such other information that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the PATRIOT Act.

[EXECUTION PAGE FOLLOWS ON NEXT PAGE]

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EXECUTION PAGE

WHEREFORE, the parties hereto have caused this Loan Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower /s/ Brian M Lee                                       Name: Title: Chief Financial Officer STI CORAL SHIPPING COMPANY LIMITED, as Guarantor /s/ Brian M Lee                                       Name: Brian M. Lee Title: Director	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank By:    /s/ Martin Lunder                                       Name: Martin Lunder Title: Senior Vice President By:    /s/ Henning Lyche Christiansen              Name: Henning Lyche Christiansen Title: First Vice President
STI DIAMOND SHIPPING COMPANY LIMITED, as Guarantor /s/ Brian M Lee                                       Name: Brian M. Lee Title: Director	DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank By:    /s/ Nikolai A Nachamkin                           Name: Nikolai A. Nachamkin Title: Senior Vice President By:    /s/ Giacomo Landi                                      Name: Giacomo Landi Title: Senior Vice President
	ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By:    /s/ J.A.L.M Gorgels                                   Name: J.A.L.M. Gorgels Title: Director By:    /s/ K.H. Tickman                                        Name: K.H. Tickman Title:

98

EX-4.12

To:	(1)	Nordea Bank Finland plc, New York Branch
		437 Madison Avenue, 21st Floor
		New York, New York 10022
		(as Agent, Lead Arranger, Security Trustee, Lender and Swap Bank)
	(2)	DNB NOR Bank ASA
		200 Park Avenue, 31st Floor
		New York, NY 10166-0396
		(as Lead Arranger, Lender and Swap Bank)
	(3)	ABN AMRO Bank N.V.
		Coolsingel 93
		3012 AE  Rotterdam
		The Netherlands
		(as Lead Arranger, Lender and Swap Bank)

September 22, 2011

Dear Sirs:

We refer to the Loan Agreement dated as of May 3, 2011 (the “Loan Agreement”) among (i) Scorpio Tankers Inc. (the “Borrower”), (ii) STI Coral Shipping Company Limited and STI Diamond Shipping Company Limited (the “Guarantors”), (iii) the banks and financial institutions listed therein as lenders (the “Lenders”), (iv) the banks and financial institutions listed therein as swap banks (the “Swap Banks”), (v) Nordea Bank Finland plc, New York Branch (the “Agent”), (vi) Nordea Bank Finland plc, New York Branch (the “Security Trustee”) and (vii) Nordea Bank Finland plc, New York Branch, DnB NOR Bank ASA and ABN AMRO Bank (the “Lead Arrangers”), relating to a term loan facility of up to US$150,000,000. Words and expressions defined in the Loan Agreement shall have the same meaning when used herein except as expressly provided in this Letter.

We request that, by countersigning this Letter, you confirm your agreement to amend the definition of “Consolidated Liquidity” and the terms of Clauses 12.4 and 12.5 of the Loan Agreement, presently providing as follows:

““Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents, in each case held by the Borrower on a freely available and unencumbered basis;”

“12.4 Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing quarter basis from and including the third fiscal quarter of 2011, provided that for the third fiscal quarter of 2012 and all periods thereafter such ratio shall be calculated on a trailing four quarter basis.”

“12.5 Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels.”

to read as follows:

““Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash, (b) Cash Equivalents and (c) the Total Available Commitment (as defined under the Amended and Restated Loan Agreement dated as of July 6, 2011 among, inter alios, the Borrower, the Lenders, the Swap Banks, the Agent, the Security Trustee and the Lead Arrangers (as amended, supplemented, modified and/or restated from time to time)), in each case held by the Borrower or any of its subsidiaries on a freely available and unencumbered basis;”

“12.4

Minimum interest coverage. Commencing with the third fiscal quarter of 2011, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00, provided that for the first fiscal quarter of 2013 and all periods thereafter such ratio shall be 2.50 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

“12.5

Free liquidity. From and after the Effective Date, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $15,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels. At all times, the Consolidated Liquidity shall have not less than $15,000,000 in cash and Cash Equivalents. For the period September 22, 2011 until December 31, 2012, the Borrower shall maintain Consolidated Liquidity of not less than $20,000,000, inclusive of any amounts otherwise maintained pursuant to this Section.”

The Guarantors, by signature of this Letter, each confirm their approval to the amendments to the Loan Agreement set out herein and confirm that the guarantee of Clause 16 of the Loan Agreement remains in full force and effect.

Other than as set out in this Letter, the provisions of the Loan Agreement shall remain unchanged and in full force and effect.

We agree that this Letter shall constitute a Finance Document for the purposes of the Loan Agreement.

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The provisions of Clause 32 (Law and Jurisdiction) of the Loan Agreement shall apply to this Letter as if set out in full but so that references to “this Agreement” are amended to read “this Letter”. All remaining provisions of the Loan Agreement and the Finance Documents shall remain in full force and effect.

Yours faithfully

/s/ Brian M Lee                                           

Brian M. Lee

Chief Financial Officer

Scorpio Tankers Inc.

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Accepted and agreed this _____day of September 2011 by:

NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank

By:   /s/ Martin Lunder                              

Name: Martin Lunder

Title: Senior Vice President

By:    /s/ Henning Lyche Christiansen   

Name: Henning Lyche Christiansen

Title: First Vice President

DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank

By:   /s/ Nikolai A Nachamkin               

Name: Nikolai A. Nachamkin

Title: Senior Vice President

By:   /s/ Evan Uhlick                               

Name: Evan Uhlick

Title: Vice President

ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank

By:   /s/ A.C.A.J. Diesbroeck                

Name:

Title:

By:   /s/ J.A.L.M Gorgels                        

Name:

Title:

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We hereby confirm and acknowledge that we have read and understood the terms and conditions of the above Letter and agree in all respects to the same and confirm that the guarantee in Clause 16 of the Loan Agreement shall remain in full force and effect and shall continue to stand as security for the Guaranteed Obligations stated therein.

STI CORAL SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                   

Name: Brian M. Lee

Title: Director

STI DIAMOND SHIPPING COMPANY LIMITED, as Guarantor

By: /s/ Brian M Lee                                

Name: Brian M. Lee

Title: Director

5

EX-4.13

Execution Version

Dated: as of June 27, 2011

SCORPIO TANKERS INC.

as Borrower

STI CORAL SHIPPING COMPANY LIMITED

and STI DIAMOND SHIPPING COMPANY LIMITED

as Joint and Several Guarantors

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lenders

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Swap Banks

NORDEA BANK FINLAND PLC, NEW YORK BRANCH

as Agent

and as Security Trustee

– and –

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lead Arrangers

_______________________________________________________

FIRST AMENDATORY AGREEMENT

______________________________________________________

Amending and Supplementing the Loan Agreement dated as of May 3, 2011

FIRST AMENDATORY AGREEMENT dated as of June 27, 2011 (this “First Amendatory Agreement”)

AMONG

(1)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as borrower (the “Borrower”);
(2)	STI CORAL SHIPPING COMPANY LIMITED and STI DIAMOND SHIPPING COMPANY LIMITED, each a corporation incorporated and existing under the laws of the Republic of The Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several guarantors (the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lenders (the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as swap banks (the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(6)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as security trustee for the Lenders and the Swap Banks (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(7)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lead arrangers (the “Lead Arrangers”, which expression includes their respective successors, transferees and assigns).

WITNESSETH THAT:

WHEREAS, the Borrower, the Guarantors, the Lenders, the Swap Banks, the Agent, the Security Trustee and the Lead Arrangers are parties to a Loan Agreement dated as of May 3, 2011 (the “Loan Agreement”).

WHEREAS, upon the terms and conditions stated herein, the parties hereto have agreed pursuant to Clause 28 of the Loan Agreement to amend and restate Clause 12.3 of the Loan Agreement.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1	DEFINITIONS
1.1	Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Loan Agreement.
2	AMENDMENTS TO THE LOAN AGREEMENT
2.1	Amendments. Subject to Clause 3 below, the parties hereto agree to amend the Loan Agreement as follows, with effect on and from the date hereof:
(a)	Clause 12.3 is amended and restated to read as follows:

“12.3  Minimum tangible net worth. The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $150,000,000 plus (a) 25% of the Borrower’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after July 1, 2010 and (b) 50% of the value of the Equity Proceeds realized from any issuance of Equity Interests in the Borrower occurring on or after July 1, 2010.”

3	CONDITIONS PRECEDENT
3.1	Conditions precedent. The effectiveness of this First Amendatory Agreement shall be subject to the Agent having received a copy (with five originals to follow) of this First Amendatory Agreement, duly executed by the parties hereto, on or before 5:00 p.m. New York time on July 1, 2011 (the “Conditions Precedent Deadline”).
4	EFFECT OF AMENDMENTS
4.1	References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Loan Agreement as amended hereby.
4.2	Effect of amendments. Subject to the terms of this First Amendatory Agreement, with effect on and from the date hereof (subject to fulfillment or waiver of the conditions precedent stated in Clause 3 above) the Loan Agreement shall be, and shall be deemed by this First Amendatory Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents shall be, and shall be deemed by this First Amendatory Agreement to have been, amended as follows:
(a)	the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended or supplemented by this First Amendatory Agreement; and

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(b)	by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this First Amendatory Agreement.
4.3	No other amendments; ratification.
(a)	Except as amended hereby, all other terms and conditions of the Loan Agreement and the other Finance Documents remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.
(b)	Without limiting the foregoing, each of the Guarantors acknowledges and agrees that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
(c)	The Borrower and the Guarantors acknowledge and agree that the Loan Agreement shall, together with this First Amendatory Agreement, be read and construed as a single agreement.
5.	REPRESENTATIONS AND WARRANTIES
5.1	Authority. The execution and delivery by each of the Borrower and the Guarantors of this First Amendatory Agreement and the performance by each of the Borrower and the Guarantors of all of its agreements and obligations under the Loan Agreement, as amended hereby, are within such Security Party’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Security Party, and no consent of any third party is required in connection with the transactions contemplated by this First Amendatory Agreement.
5.2	Enforceability. This First Amendatory Agreement and the Loan Agreement, as amended hereby, constitute the legal, valid and binding obligations of each of the parties hereto and are enforceable against such parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought.
5.3	Certifications. Each of the Borrower and the Guarantors certifies that:
(a)	there is no proceeding for the dissolution or liquidation of such party;
(b)	the representations and warranties contained in the Loan Agreement, as amended hereby, are true and correct as though made on and as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;

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(c)	there is no material misstatement of fact in any information provided by each of the Borrower and the Guarantors to the Agent or the Lender or the Swap Banks since May 3, 2011, and such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d)	there is no event occurring and continuing, or resulting from this First Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(e)	there have been no amendments to the constitutional documents of any Security Party since May 3, 2011.
6	MISCELLANEOUS
6.1	Governing law. THIS FIRST AMENDATORY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401).
6.2	Counterparts. This First Amendatory Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
6.3	Severability. Any provision of this First Amendatory Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.
6.4	Payment of expenses. The Borrower agrees to pay or reimburse each of the Creditor Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this First Amendatory Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Creditor Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Creditor Parties in connection with the foregoing.
6.5	Headings and captions. The headings captions in this First Amendatory Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

[SIGNATURE PAGE FOLLOWS]

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WHEREFORE, the parties hereto have caused this First Amendatory Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower By: /s/ Brian M. Lee                            Name: Brian M. Lee Title: Chief Financial Officer STI CORAL SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                             Name: Brian M. Lee Title: Secretary	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank By:   /s/ Martin Lunder                               Name: Martin Lunder Title: Senior Vice President By:   /s/ Justin K. Martin                             Name: Justin K. Martin Title: Assistant Vice President
STI DIAMOND SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                             Name: Brian M. Lee Title: Secretary	DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank By:   /s/ Nikolai A Nachamkin                     Name: Nikolai A. Nachamkin Title: Senior Vice President By:   /s/ Evan Uhlick                                     Name: Evan Uhlick Title: Vice President
	ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By:   /s/ J.A.L.M. Gorgels                            Name: J.A.L.M. Gorgels Title: Director By:   /s/ A.C.A.J. Diesbroeck                      Name: Title:

5

EX-4.14

Execution Version

Dated: as of December 22, 2011

SCORPIO TANKERS INC.

as Borrower

STI CORAL SHIPPING COMPANY LIMITED

and STI DIAMOND SHIPPING COMPANY LIMITED

as Joint and Several Guarantors

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lenders

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Swap Banks

NORDEA BANK FINLAND PLC, NEW YORK BRANCH

as Agent

and as Security Trustee

– and –

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,

DNB NOR BANK ASA and ABN AMRO BANK N.V.

as Lead Arrangers

_______________________________________________________

SECOND AMENDATORY AGREEMENT

______________________________________________________

Amending and Supplementing the Loan Agreement dated as of May 3, 2011,

as amended by a First Amendatory Agreement dated as of June 27, 2011 and

a Letter Agreement dated September 22, 2011

SECOND AMENDATORY AGREEMENT dated as of December 22, 2011 (this “Second Amendatory Agreement”)

AMONG

(1)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as borrower (the “Borrower”);
(2)	STI CORAL SHIPPING COMPANY LIMITED and STI DIAMOND SHIPPING COMPANY LIMITED, each a corporation incorporated and existing under the laws of the Republic of The Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several guarantors (the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lenders (the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as swap banks (the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns);
(6)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, acting in such capacity through its office at 437 Madison Avenue, 21st Floor, New York, New York 10022, as security trustee for the Lenders and the Swap Banks (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns); and
(7)	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, DNB NOR BANK ASA, and ABN AMRO BANK N.V. as lead arrangers (the “Lead Arrangers”, which expression includes their respective successors, transferees and assigns).

WITNESSETH THAT:

WHEREAS, the Borrower, the Guarantors, the Lenders, the Swap Banks, the Agent, the Security Trustee and the Lead Arrangers are parties to a Loan Agreement dated as of May 3, 2011 (as amended by a First Amendatory Agreement dated as of June 27, 2011 and a Letter Agreement dated September 22, 2011, the “Loan Agreement”).

WHEREAS, upon the terms and conditions stated herein, the parties hereto have agreed pursuant to Clause 28 of the Loan Agreement to (a) amend the definitions of “Availability Period” and “Margin”, (b) waive compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement during the Waiver Period (as defined below), and (c) amend Clause 12.4 with effect on and after October 1, 2013.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1	DEFINITIONS
1.1	Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Loan Agreement. In addition:
	“Waiver Period” means the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on the earliest to occur of (a) September 30, 2013 at 11:59:59 p.m. New York City time and (b) the occurrence after the commencement of the Waiver Period of any Event of Default, including, without limitation, any failure to comply with the provisions of this Second Amendatory Agreement.
2	AMENDMENTS TO THE LOAN AGREEMENT; WAIVERS OF COVENANTS
2.1	Amendments.
(a)	Subject to Clause 3 below, the definitions of “Availability Period” and “Margin” in the Loan Agreement are amended and restated to read as follows:
	““Availability Period” means the period commencing on the Effective Date and ending on:

(a)	the date which is 24 months after the Effective Date (or such later date as the Agent may, with the consent of the Majority Lenders, agree with the Borrower); or
(b)	if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;”

““Margin” means:

(a) During the period commencing on the initial Drawdown Date and ending on December 29, 2011 at 11:59:59 p.m.:

(i)	2.75% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than 45%;
(ii)	3.00% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is equal to or greater than 45% and less than or equal to 50%; and
(iii)	3.25% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;

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(b)	3.50% per annum during the period commencing on December 30, 2011 at 12:00 a.m. New York City time and ending on September 30, 2013 at 11:59:59 p.m. New York City time; and
(b)	During the period commencing on October 1, 2013 at 12:00 a.m. New York City time and at all times thereafter:

(i)	3.25% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is less than or equal to 50%; and
(ii)	3.50% per annum, if the ratio of Consolidated Funded Debt to Consolidated Total Capitalization is greater than 50%;”

(b) Subject to Clause 3 below, Clause 12.4 is amended and restated to read as follows on and after October 1, 2013:

“12.4 Minimum interest coverage. Commencing on October 1, 2013, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00. Such ratio shall at all times be calculated on a trailing four quarter basis.”

2.2

Waivers. Subject to Clause 3 below, the Creditor Parties agree to waive compliance by the Borrower during the Waiver Period with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (the “Specified Waivers”), provided that at all times during the Waiver Period, the Borrower (i) shall not declare or pay any dividends unless the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is equal to or exceeds 2.00 to 1.00, and (ii) shall be in compliance with the following covenants (and for the avoidance of doubt the Borrower’s compliance with the requirements of Clauses 12.4 and 12.5 of the Loan Agreement (as amended hereby in the case of Clause 12.4) shall be reinstated immediately upon the expiration of the Waiver Period and shall be required at all times thereafter):

(a)

Minimum interest coverage.

(i)	During the period commencing on October 1, 2011 at 12:00 a.m. New York City time and ending on December 31, 2012 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.25 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(ii)	During the period commencing on January 1, 2013 at 12:00 a.m. New York City time and ending on March 31, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.50 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;
(iii)	During the period commencing on April 1, 2013 at 12:00 a.m. New York City time and ending on June 30, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 1.75 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis;

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(iv) During the period commencing on July 1, 2013 at 12:00 a.m. New York City time and ending on September 30, 2013 at 11:59:59 p.m. New York City time, the Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00.  Such ratio shall at all times be calculated on a trailing four quarter basis.

(b)	Free liquidity. The Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $25,000,000 until the Borrower owns directly or indirectly a fleet of 15 vessels. When the Borrower owns directly or indirectly a fleet of 15 vessels, the Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, of not less than $25,000,000 plus $750,000 per each additional vessel that the Borrower directly or indirectly owns over 15 vessels. At all times during the Waiver Period, the Consolidated Liquidity shall consist of not less than $15,000,000 in cash and Cash Equivalents.
3	CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
3.1	Conditions precedent and subsequent. The effectiveness of this Second Amendatory Agreement shall be subject to the completion, to the satisfaction of the Agent, of the following conditions precedent and subsequent:
(a)	On or before 5:00 p.m. New York City time on December 30, 2011 (in the case of subparagraphs (i), (ii), (iv) and (v) below) and January 10, 2012 (in the case of subparagraph (iii) below) (each, a “Conditions Precedent Deadline”), the Agent shall have received:

(i)	a copy (with the original to follow) of this Second Amendatory Agreement, duly executed by the parties hereto;
(ii)	copies of certificates dated as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline, certifying that the Borrower and each of the Guarantors is duly incorporated or formed and in good standing under the laws of its jurisdiction of incorporation or formation;
(iii)	copies of resolutions of the directors and, if necessary, the shareholders of the Borrower and each of the Guarantors authorizing the execution of this Second Amendatory Agreement and all other documents required hereby to which the Borrower or that Guarantor is to be a party, in each case certified as of a date not more than five (5) Business Days prior to the Conditions Precedent Deadline by an officer of such party as being a true and correct copy thereof;
(iv)	a copy (with the original to follow) of any power of attorney under which this Second Amendatory Agreement and of all other documents required hereby is to be executed on behalf of the Borrower or a Guarantor; and
(v)	an amendment fee of $373,294.71.

4

(b) On or before 5:00 p.m. New York City time on January 10, 2012 (in the case of subparagraph (i) below) and January 20, 2012 (in the case of subparagraphs (ii) and (iii) below) (each, a “Conditions Subsequent Deadline”), the Agent shall have received:

(i)	a valuation of the Fair Market Value of each Ship, dated not earlier than December 15, 2011, based on the average of two (2) valuations each prepared and addressed to the Agent by an Approved Broker;
(ii)	an original addendum to the Mortgage in respect of each of the Ships, each such addendum to be in form and substance satisfactory to the Agent and duly executed by the parties thereto, together with documentary evidence that such addendum has been duly recorded according to the laws of the Republic of The Marshall Islands; and
(iii)	favorable legal opinions from lawyers appointed by the Borrower on such matters concerning the laws of such relevant jurisdictions as the Agent may require.

3.2	Waiver of conditions precedent or subsequent. The Agent, with the consent of the Lenders and the Swap Banks, may waive one or more of the conditions referred to in Clause 3.1(a) or 3.1(b) provided that the Borrower delivers to the Agent a written undertaking to satisfy such conditions within ten (10) Business Days (or such longer period as the Agent may specify) after the Agent grants such waiver.
3.3	Failure to complete conditions precedent or subsequent. If the Borrower and the Guarantors fail to complete all or any of the conditions required by Clause 3.1(a) by the applicable Conditions Precedent Deadline or Clause 3.1(b) by the applicable Conditions Subsequent Deadline, the Borrowers and the Guarantors acknowledge and agree that the amendments made in Clause 2.1 hereof and the Specified Waivers made in Clause 2.2 hereof shall be null, void and of no effect whatsoever and that the Creditor Parties shall be entitled to all rights and to exercise all remedies afforded to them under the terms of the Loan Agreement (all of which are expressly reserved) as if (a) such amendments had not been made and (b) the Specified Waivers had not been granted by this Second Amendatory Agreement.
4	EFFECT OF AMENDMENTS
4.1	References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Loan Agreement as amended hereby.
4.2	Effect of amendments. Subject to the terms of this Second Amendatory Agreement, with effect on and from the date hereof (subject to fulfillment or waiver of the conditions precedent and conditions subsequent stated in Clause 3 above) the Loan Agreement shall be, and shall be deemed by this Second Amendatory Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents shall be, and shall be deemed by this Second Amendatory Agreement to have been, amended as follows:

5

(a)	the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended or supplemented by this Second Amendatory Agreement; and
(b)	by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Second Amendatory Agreement.
4.3	No other amendments; ratification.
(a)	Except as amended hereby, all other terms and conditions of the Loan Agreement and the other Finance Documents remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.
(b)	Without limiting the foregoing, each of the Guarantors acknowledges and agrees that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
(c)	The Borrower and the Guarantors acknowledge and agree that the Loan Agreement shall, together with this Second Amendatory Agreement, be read and construed as a single agreement.
5	REPRESENTATIONS AND WARRANTIES
5.1	Authority. The execution and delivery by each of the Borrower and the Guarantors of this Second Amendatory Agreement and the performance by each of the Borrower and the Guarantors of all of its agreements and obligations under the Loan Agreement, as amended or temporarily waived hereby, are within such Security Party’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Security Party, and no consent of any third party is required in connection with the transactions contemplated by this Second Amendatory Agreement.
5.2	Enforceability. This Second Amendatory Agreement and the Loan Agreement, as amended hereby, constitute the legal, valid and binding obligations of each of the parties hereto and are enforceable against such parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought.
5.3	Certifications. Each of the Borrower and the Guarantors certifies that:
(a)	there is no proceeding for the dissolution or liquidation of such party;

6

(b)	the representations and warranties contained in the Loan Agreement, as amended hereby, are true and correct as though made on and as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;
(c)	there is no material misstatement of fact in any information provided by each of the Borrower and the Guarantors to the Agent or the Lender or the Swap Banks since May 3, 2011, and such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d)	there is no event occurring and continuing, or resulting from this Second Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(e)	there have been no amendments to the constitutional documents of any Security Party since May 3, 2011.
6.	MISCELLANEOUS
6.1	Governing law. THIS SECOND AMENDATORY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401).
6.2	Counterparts. This Second Amendatory Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
6.3	Severability. Any provision of this Second Amendatory Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.
6.4	Payment of expenses. The Borrower agrees to pay or reimburse each of the Creditor Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this Second Amendatory Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Creditor Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Creditor Parties in connection with the foregoing.
6.5	Headings and captions. The headings captions in this Second Amendatory Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

[SIGNATURE PAGE FOLLOWS]

7

WHEREFORE, the parties hereto have caused this Second Amendatory Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower By: /s/ Brian M. Lee                          Name: Brian M. Lee Title: Chief Financial Officer STI CORAL SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                           Name: Brian M. Lee Title: Secretary	NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender, Agent, Security Trustee, Lead Arranger and Swap Bank By:   /s/ Martin Lunder                           Name: Martin Lunder Title: Senior Vice President By:   /s/ Henning Lyche Christiansen   Name: Henning Lyche Christiansen Title: First Vice President
STI DIAMOND SHIPPING COMPANY LIMITED, as Guarantor By: /s/ Brian M Lee                           Name: Brian M. Lee Title: Secretary	DNB NOR BANK ASA, as Lender, Lead Arranger and Swap Bank By:   /s/ Nikolai A Nachamkin               Name: Nikolai A. Nachamkin Title: Senior Vice President By:   /s/ Giacomo Landi                           Name: Giacomo Landi Title: Senior Vice President
	ABN AMRO BANK N.V., as Lender, Lead Arranger and Swap Bank By:   /s/ W.P. van Aerssen                     Name: Title: By:    /s/ A.C.A.J. Diesbroeck                Name: Title:

8

EX-4.15

Date: as of December 21, 2011

STI AMBER SHIPPING COMPANY LIMITED

STI GARNET SHIPPING COMPANY LIMITED

STI RUBY SHIPPING COMPANY LIMITED

STI TOPAZ SHIPPING COMPANY LIMITED

as joint and several Borrowers

SCORPIO TANKERS INC.
as Guarantor

THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders

THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks

- and -

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Arranger, Agent
and as Security Trustee

________________________________________

LOAN AGREEMENT

________________________________________

relating to senior secured term loan facility in the amount of up to US$92,000,000

TABLE OF CONTENTS

			Page
1.     INTERPRETATION			2
	1.1	Definitions	2
	1.2	Construction of certain terms	29
	1.3	Meaning of “month”	31
	1.4	Meaning of “subsidiary”	31
	1.5	General interpretation	32
	1.6	Headings	32
	1.7	Accounting terms	32
	1.8	Inferences regarding materiality	32
2.      FACILITY			33
	2.1	Amount of facility	33
	2.2	Lenders’ participations in Advance	33
	2.3	Purpose of Advance	33
	2.4	Reduction and cancellation of Total Commitments	33
3.      POSITION OF THE LENDERS			33
	3.1	Interests several	33
	3.2	Individual right of action	33
	3.3	Proceedings requiring Majority Lender consent	33
	3.4	Obligations several	33
	3.5	Replacement of a Lender.	34
4.     DRAWDOWN			35
	4.1	Request for Advance	35
	4.2	Availability	35
	4.3	Notification to Lenders of receipt of a Drawdown Notice	36
	4.4	Drawdown Notice irrevocable	36
	4.5	Lenders to make available Contributions	36
	4.6	Disbursement of Advance	36
	4.7	Disbursement of Advance to third party	36
	4.8	Promissory note.	36
5.      INTEREST			37
	5.1	Normal rate of interest	37
	5.2	Payment of normal interest	37
	5.3	Payment of accrued interest	37
	5.4	Notification of Interest Periods and rates of normal interest	37
	5.5	Notice of prepayment	37
	5.6	Prepayment; termination of Commitments	37
	5.7	Application of prepayment	38
	5.8	Market disruption.	38

i

6.      INTEREST PERIODS			39
	6.1	Commencement of Interest Periods	39
	6.2	Duration of normal Interest Periods	39
	6.3	Duration of Interest Periods for repayment installments	40
	6.4	Non-availability of matching deposits for Interest Period selected	40
7.      DEFAULT INTEREST			40
	7.1	Payment of default interest on overdue amounts	40
	7.2	Default rate of interest	40
	7.3	Calculation of default rate of interest	40
	7.4	Notification of interest periods and default rates	41
	7.5	Payment of accrued default interest	41
	7.6	Application to Master Agreement	41
8.      REPAYMENT AND PREPAYMENT			41
	8.1	Amount of repayment installments	41
	8.2	Repayment Dates	42
	8.3	Maturity Date	42
	8.4	Voluntary prepayment	42
	8.5	Conditions for voluntary prepayment	42
	8.6	Effect of notice of prepayment	42
	8.7	Notification of notice of prepayment	42
	8.8	Application of partial prepayment	42
	8.9	Mandatory prepayment	43
	8.10	Amounts payable on prepayment	43
	8.11	No reborrowing	43
	8.12	Unwinding of Designated Transactions	43
	8.13	Release of Borrower	43
9.      CONDITIONS PRECEDENT			43
	9.1	Documents, fees and no default	43
	9.2	Waiver of conditions precedent	45
10.      REPRESENTATIONS AND WARRANTIES			47
	10.1	General	47
	10.2	Status	47
	10.3	Company power; consents	47
	10.4	Consents in force	48
	10.5	Title.	48
	10.6	Legal validity; effective Security Interests	48
	10.7	No third party Security Interests	48
	10.8	No conflicts	49
	10.9	Taxes.	49
	10.10	No default	50
	10.11	Information	50
	10.12	No litigation	51
	10.13	ISM Code and ISPS Code compliance	51

ii

	10.14	Validity and completeness of Contracts	51
	10.15	No rebates etc.	51
	10.16	Compliance with law; Environmentally Sensitive Material	51
	10.17	Ownership structure.	52
	10.18	Pension Plans	52
	10.19	Margin Stock	52
	10.20	Investment company, public utility, etc.	52
	10.21	Asset Control.	52
	10.22	No money laundering	53
	10.23	Ships	53
	10.24	Place of Business	54
	10.25	Solvency	54
	10.26	Borrowers’ business; Guarantor’s business	54
	10.27	Immunity; Enforcement; Submission to Jurisdiction; Choice of Law.	54
	10.28	Status of Secured Liabilities	55
11.      GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS			55
	11.1	Affirmative covenants	55
	11.2	Negative covenants	62
12.      FINANCIAL COVENANTS			64
	12.1	General	64
	12.2	Maximum leverage	64
	12.3	Minimum tangible net worth	64
	12.4	Minimum interest coverage	65
	12.5	Free liquidity	65
13.      MARINE INSURANCE COVENANTS			65
	13.1	General	65
	13.2	Maintenance of obligatory insurances	65
	13.3	Terms of obligatory insurances	65
	13.4	Further protections for the Creditor Parties	66
	13.5	Renewal of obligatory Insurances	67
	13.6	Copies of policies; letters of undertaking	68
	13.7	Copies of certificates of entry	68
	13.8	Deposit of original policies	69
	13.9	Payment of premiums	69
	13.10	Guarantees	69
	13.11	Compliance with terms of insurances	69
	13.12	Alteration to terms of insurances	70
	13.13	Settlement of claims	70
	13.14	Provision of copies of communications	70
	13.15	Provision of information	70
	13.16	Mortgagee’s interest, additional perils and political risk insurances	71
	13.17	Review of insurance requirements	71
	13.18	Modification of insurance requirements	71
	13.19	Compliance with instructions	71

iii

14.      SHIP COVENANTS			71
	14.1	General	71
	14.2	Ship’s name and registration	71
	14.3	Repair and classification	72
	14.4	Classification Society instructions	72
	14.5	Modification	73
	14.6	Removal of parts	73
	14.7	Surveys	73
	14.8	Inspection	73
	14.9	Prevention of and release from arrest	73
	14.10	Compliance with laws etc	74
	14.11	Provision of information	74
	14.12	Notification of certain events	75
	14.13	Restrictions on chartering, appointment of managers etc	75
	14.14	Notice of Mortgage	76
	14.15	ISPS Code	76
15.      SECURITY MAINTENANCE COVER RATIO			76
	15.1	General	76
	15.2	Security Maintenance Cover Ratio	76
	15.3	Provision of additional security; prepayment	77
	15.4	Value of additional vessel security	77
	15.5	Valuations binding	77
	15.6	Provision of information	77
	15.7	Payment of valuation expenses	78
	15.8	Application of prepayment	78
16.      GUARANTEE			78
	16.1	Guarantee and indemnity	78
	16.2	Continuing guarantee	78
	16.3	Performance of Guaranteed Obligations; obligations pari passu.	79
	16.4	Reinstatement	79
	16.5	Liability absolute and unconditional	79
	16.6	Waiver of promptness, etc.	80
	16.7	Waiver of revocation, etc.	80
	16.8	Waiver of certain defenses	80
	16.9	Waiver of disclosure, etc.	81
	16.10	Immediate recourse	81
	16.11	Acknowledgment of benefits	81
	16.12	Independent obligations	81
	16.13	Deferral of Guarantor’s rights	81
	16.14	Limitation of liability	81
	16.15	Reliance of Creditor Parties	82

iv

16A.      BORROWERS’ SWAP GUARANTEE			82
	16A.1	Guarantee and indemnity	82
	16A.2	Continuing guarantee	82
	16A.3	Performance of Guaranteed Swap Obligations; obligations pari passu.	83
	16A.4	Reinstatement	83
	16A.5	Liability absolute and unconditional	83
	16A.6	Waiver of promptness, etc	84
	16A.7	Waiver of revocation, etc.	84
	16A.8	Waiver of certain defenses	84
	16A.9	Waiver of disclosure, etc.	84
	16A.10	Immediate recourse	85
	16A.11	Acknowledgment of benefits	85
	16A.12	Independent obligations	85
	16A.13	Deferral of Borrower’s rights	85
	16A.14	Limitation of liability	85
	16A.15	Reliance of Creditor Parties	86
17.      PAYMENTS AND CALCULATIONS			86
	17.2	Currency and method of payments	86
	17.3	Payment on non-Business Day	86
	17.4	Basis for calculation of periodic payments	86
	17.5	Distribution of payments to Creditor Parties	87
	17.6	Permitted deductions by Agent	87
	17.7	Agent only obliged to pay when monies received	87
	17.8	Refund to Agent of monies not received	87
	17.9	Agent may assume receipt	87
	17.10	Creditor Party accounts	87
	17.11	Agent’s memorandum account	88
	17.12	Accounts prima facie evidence	88
18.     APPLICATION OF RECEIPTS			88
	18.1	Normal order of application	88
	18.2	Variation of order of application	89
	18.3	Notice of variation of order of application	89
	18.4	Appropriation rights overridden	89
	18.5	Payments in excess of Contribution.	89
19.      APPLICATION OF EARNINGS, SALES PROCEEDS, INSURANCE PROCEEDS AND RETENTION ACCOUNT			90
	19.1	General	90
	19.2	Payment of Earnings	90
	19.3	Location of Accounts	90
	19.4	Borrowers’ obligations unaffected	90
	19.5	Interest accrued on Retention Account	91
	19.6	Debt for expenses etc.	91
	19.7	Retention Account: credits and withdrawals	91
	19.8	Earnings Account Balance	92

v

20.      EVENTS OF DEFAULT			92
	20.1	Events of Default.  An Event of Default occurs if:	92
	20.2	Actions following an Event of Default	94
	20.3	Termination of Commitments	95
	20.4	Acceleration of Loan	95
	20.5	Multiple notices; action without notice	95
	20.6	Notification of Creditor Parties and Security Parties	95
	20.7	Creditor Party rights unimpaired	96
	20.8	Exclusion of Creditor Party liability	96
	20.9	Position of Swap Counterparties	96
21.      FEES AND EXPENSES			96
	21.1	Arrangement, commitment and up front fees	96
	21.2	Costs of negotiation, preparation etc.	97
	21.3	Costs of variations, amendments, enforcement etc	97
	21.4	Documentary taxes	97
	21.5	Certification of amounts	97
22.      INDEMNITIES			97
	22.1	Indemnities regarding borrowing and repayment of Loan	97
	22.2	Breakage costs	98
	22.3	Miscellaneous indemnities	98
	22.4	Currency indemnity	99
	22.5	Application to Master Agreements	99
	22.6	Certification of amounts	99
	22.7	Sums deemed due to a Lender	100
23.      NO SET-OFF OR TAX DEDUCTION; TAX INDEMNITY			100
	23.1	No deductions	100
	23.2	Grossing-up for taxes	100
	23.3	Evidence of payment of taxes	100
	23.4	Indemnity for taxes	100
	23.5	Exclusion from indemnity and gross-up for taxes	100
	23.6	Delivery of tax forms.	101
	23.7	Application to Master Agreements	102
24.     ILLEGALITY, ETC			102
	24.1	Illegality	102
	24.2	Notification of illegality	102
	24.3	Prepayment; termination of Commitment	102
	24.4	Mitigation	102

vi

25.      INCREASED COSTS			103
	25.1	Increased costs	103
	25.2	Meaning of “increased costs”	103
	25.3	Notification to Borrowers of claim for increased costs	104
	25.4	Payment of increased costs	104
	25.5	Notice of prepayment	104
	25.6	Prepayment; termination of Commitment	104
	25.7	Application of prepayment	104
26.      SET-OFF			104
	26.1	Application of credit balances	104
	26.2	Existing rights unaffected	105
	26.3	Sums deemed due to a Lender	105
	26.4	No Security Interest	105
27.      TRANSFERS AND CHANGES IN LENDING OFFICES			105
	27.1	Transfer by Borrowers or Guarantor	105
	27.2	Transfer by a Lender	105
	27.3	Transfer Certificate, delivery and notification	106
	27.4	Effective Date of Transfer Certificate	106
	27.5	No transfer without Transfer Certificate	106
	27.6	Lender re-organization; waiver of Transfer Certificate	106
	27.7	Effect of Transfer Certificate	107
	27.8	Maintenance of register of Lenders	107
	27.9	Reliance on register of Lenders	108
	27.10	Authorization of Agent to sign Transfer Certificates	108
	27.11	Registration fee	108
	27.12	Sub-participation; subrogation assignment	108
	27.13	Disclosure of information	108
	27.14	Change of lending office	108
	27.15	Notification	108
	27.16	Security over Lenders’ rights	108
28.      VARIATIONS AND WAIVERS			109
	28.1	Variations, waivers etc. by Majority Lenders	109
	28.2	Variations, waivers etc. requiring agreement of all Lenders	109
	28.3	Variations, waivers etc. relating to the Servicing Banks	110
	28.4	Exclusion of other or implied variations	110
29.      NOTICES			110
	29.1	General	110
	29.2	Addresses for communications	110
	29.3	Effective date of notices	112
	29.4	Service outside business hours	112
	29.5	Illegible notices	113
	29.6	Valid notices	113
	29.7	English language	113
	29.8	Meaning of “notice”	113

vii

30.      SUPPLEMENTAL			113
	30.1	Rights cumulative, non-exclusive	113
	30.2	Severability of provisions	113
	30.3	Counterparts	113
	30.4	Binding Effect	113
31.      THE SERVICING BANKS AND PARALLEL DEBT			114
	31.1	Appointment and Granting.	114
	31.2	Scope of Duties	115
	31.3	Reliance	116
	31.4	Knowledge	116
	31.5	Security Trustee and Agent as Lenders	116
	31.6	Indemnification of Security Trustee and Agent	117
	31.7	Reliance on Security Trustee or Agent	117
	31.8	Actions by Security Trustee and Agent	118
	31.9	Resignation and Removal	118
	31.10	Release of Collateral	118
	31.11	Parallel Debt	118
32.      LAW AND JURISDICTION			119
	32.1	Governing law	119
	32.2	Consent to Jurisdiction.	120
	32.3	Creditor Party rights unaffected	120
	32.4	Meaning of “proceedings”	121
33.      WAIVER OF JURY TRIAL			121
	33.1	WAIVER	121
34.     PATRIOT ACT NOTICE			121
	34.1	PATRIOT Act Notice	121

Appendix A	152
Appendix B	153
Appendix C	154
Appendix D	155
Appendix E	156
Appendix F	157
Appendix G	158
Appendix H	159
Appendix I	160
Appendix J	161
Appendix K	162
EXECUTION PAGE	122
Schedule 1	124
Schedule 2	125
Schedule 3	126
Schedule 4	127
Schedule 5	131
Schedule 6	141
Schedule 7	145
Schedule 8	146
Schedule 9	147

viii

APPENDIX A FORM OF CHARTER ASSIGNMENT	143
APPENDIX B FORM OF COMPLIANCE CERTIFICATE	144
APPENDIX C FORM OF ACCOUNT PLEDGE	145
APPENDIX D FORM OF EARNINGS ASSIGNMENT	146
APPENDIX E FORM OF MORTGAGE	147
APPENDIX F FORM OF PRE-DELIVERY SECURITY ASSIGNMENT	148
APPENDIX G FORM OF MANAGER’S UNDERTAKING	149
APPENDIX H FORM OF NOTE	150
APPENDIX I FORM OF SHARES PLEDGE	151
APPENDIX J FORM OF SWAP ASSIGNMENT	152
APPENDIX K FORM OF INSURANCE ASSIGNMENT	153

ix

THIS LOAN AGREEMENT (this “Agreement”) is made as of December 21, 2011

AMONG

(1)	STI AMBER SHIPPING COMPANY LIMITED (“Amber”), STI GARNET SHIPPING COMPANY LIMITED (“Garnet”), STI RUBY SHIPPING COMPANY LIMITED (“Ruby”) and STI TOPAZ SHIPPING COMPANY LIMITED (“Topaz” and together with Amber, Garnet and Ruby, the “Borrowers” and, each individually, a “Borrower”, which expression includes their respective successors, transferees and assigns) each a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several borrowers;
(2)	SCORPIO TANKERS INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000, as guarantor (the “Guarantor”, which expression includes its successors, transferees and assigns);
(3)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “Lenders”, which expression includes their respective successors, transferees and assigns);
(4)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as Swap banks (together with any other person that becomes a swap bank pursuant to a Swap Bank Accession Agreement (as defined below), the “Swap Banks”, which expression includes their respective successors, transferees and assigns);
(5)	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns), acting in such capacity through its principal office at 9 quai du President Paul Doumer, 92920 Paris La Defense Cedex, France;
(6)	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as security trustee for the Lenders (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns), acting in such capacity through its principal office at 9 quai du President Paul Doumer, 92920 Paris La Defense Cedex, France; and
(7)	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as arranger (in such capacity, the “Arranger”, which expression includes its successors, transferees and assigns), acting in such capacity through its principal office at 9 quai du President Paul Doumer, 92920 Paris La Defense Cedex, France.

1

BACKGROUND

(A)     The Lenders have agreed to make available to the Borrowers a loan facility of up to $92,000,000 for the purpose of financing part of the shipbuilding purchase price for the Ships.

(B)     At their discretion, the Swap Banks may make available to the Borrowers interest rate swap transactions from time to time to hedge the Borrowers’ exposure under this Agreement to interest rate fluctuations.

(C)     The Lenders and the Swap Banks have agreed to share in the security to be granted to the Security Trustee pursuant to this Agreement pari passu.

IT IS AGREED as follows:

1.	INTERPRETATION
1.1	Definitions.  Subject to Clause 1.5, in this Agreement:

“Acceptable Accounting Firm” means Deloitte LLP, or such other recognized accounting firm as the Agent may, from time to time approve in its reasonable discretion;

“Acceptable Long Term Employment” means a time charter contract or other contract of employment (a) having a duration of two (2) years or more with at least three (3) months remaining on the term thereof (inclusive of any extensions); (b) with a charterer reasonably acceptable to the Majority Lenders; and (c) having such other terms and conditions reasonably acceptable to the Majority Lenders;

“Account Bank” means CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, acting through its principal office at 9 quai du President Paul Doumer, 92920 Paris La Defense Cedex, France;

“Account Pledge” means the pledge of the Earnings Accounts and the Retention Account pursuant to the Balance Accounts Pledge Agreement in the form set out in Appendix C;

“Advance” means each borrowing of a portion of the Total Commitment by the Borrowers or (as the context may require) the outstanding principal amount of such borrowing at any relevant time, and includes the Amber Contract Installment Advance, the Amber Delivery Advance, the Garnet Contract Installment Advance, the Garnet Delivery Advance, the Ruby Contract Installment Advance, the Ruby Delivery Advance, the Topaz Contract Installment Advance and the Topaz Delivery Advance, and also

(a)	in relation to the Amber Ship and/or Amber and/or the Amber Tranche, it means the Amber Contract Installment Advance and the Amber Delivery Advance;
(b)	in relation to the Garnet Ship and/or Garnet and/or the Garnet Tranche, it means the Garnet Contract Installment Advance and the Garnet Delivery Advance;

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(c)	in relation to the Ruby Ship and/or Ruby and/or the Ruby Tranche, it means the Ruby Contract Installment Advance and the Ruby Delivery Advance; and
(d)	in relation to the Topaz Ship and/or Topaz and/or the Topaz Tranche, it means the Topaz Contract Installment Advance and the Topaz Delivery Advance; and “Advances” means any or all of them;

“Affiliate” means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise;

“Agreed Form” means in relation to any document, that document in the form reasonably acceptable to the Agent with the consent of the Majority Lenders (such consent not to be unreasonably withheld), or as otherwise reasonably approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;

“Amber Commercial Management Agreement” means an Approved Commercial Management Agreement for the Amber Ship;

“Amber Contract” means the shipbuilding contract dated June 2, 2011 made between Amber and the Builder, as may be amended and supplemented from time to time, relating to the construction and sale by the Builder, and the purchase by Amber of the Amber Ship;

“Amber Contract Assignment Consent and Acknowledgement” means the acknowledgement of notice of, and consent to, the assignment in respect of the Amber Contract given or to be given in the form annexed to the Amber Pre-delivery Security Assignment;

“Amber Contract Installment Advance” means, in relation to the Amber Ship, an Advance of a portion of the Total Commitment, in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in part payment of the fourth installment of the Amber Contract Price due before the Delivery Date for the Amber Ship;

“Amber Contract Price” means the purchase price for the Amber Ship under the Amber Contract, being $37,405,500 or such lesser sum in Dollars as may be payable as the purchase price for the Amber Ship by Amber to the Builder pursuant to the Amber Contract;

“Amber Delivery Advance” means in relation to the Amber Ship, an Advance of a portion of the Total Commitment in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in full the payment of the delivery installment of the Amber Contract Price due on the Delivery Date for the Amber Ship;

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“Amber Earnings Account” means, in relation to the Amber Ship, an account in the name of Amber with the Account Bank designated the Amber - Earnings Account, or any other account which is designated by the Agent as the Amber Earnings Account in relation to the Amber Ship for the purpose of this Agreement;

“Amber Earnings Assignment” means in relation to the Amber Ship, an assignment of the Earnings and any Requisition Compensation of the Amber Ship, in the form set out in Appendix D;

“Amber Insurance Assignment” means in relation to the Amber Ship; an assignment of the Insurances applicable to the Amber Ship, in the form set out in Appendix K;

“Amber Mortgage” means the first preferred mortgage to be executed by Amber in favor of the Security Trustee in the form set out in Appendix E;

“Amber Pre-delivery Security Assignment” means an assignment of the Amber Contract and the Amber Refund Guarantee in the form set out in Appendix F;

“Amber Refund Guarantee” means each letter of guarantee issued or to be issued by the Refund Guarantor as amended and supplemented from time to time in favor of Amber in respect of the Builder’s obligations under the Amber Contract, each in the form required by the Amber Contract, and any further guarantee(s) to be issued by the Refund Guarantor in respect of any agreement supplemental to the Amber Contract, and any extension, renewal or replacement thereto or thereof.

“Amber Refund Guarantee Assignment Consent and Acknowledgement” means in relation to each Amber Refund Guarantee, an acknowledgement of notice of, and consent to, the assignment in respect of that Amber Refund Guarantee given or to be given by the Refund Guarantor in the form annexed to the Amber Pre-delivery Security Assignment;

“Amber Ship” means the 52,000 dwt product tanker known on the date of this Agreement as Hull No. 2332 at the Builder’s yard, to be constructed and sold by the Builder to Amber pursuant to the Amber Contract and to be registered on its Delivery Date in the ownership of Amber through the relevant Registry under the law of an Approved Flag with the name STI AMBER;

“Amber Technical Management Agreement” means an Approved Technical Management Agreement for the Amber Ship;

“Amber Tranche” means a Tranche of the Total Commitment and the Loan of up to $23,000,000, comprising the Amber Contract Installment Advance and the Amber Delivery Advance, or the aggregate principal amount of such Tranche outstanding at any relevant time;

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“Approved Broker” means any of the companies listed on Schedule 8 or such other company proposed by the Borrowers which the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld), approve from time to time for the purpose of valuing the Ships who shall act as an expert and not as arbitrator and whose valuation shall be conclusive and binding on all parties to this Agreement;

“Approved Commercial Management Agreement” means, in relation to a Ship in respect of its commercial management, a management agreement between the relevant Borrower and an Approved Commercial Manager which shall be on the BIMCO Shipman 98 form or such other form of management agreement, in each case which the Agent may reasonably approve;

“Approved Commercial Manager” means SCM or any other commercial management company proposed by the Borrowers which the Agent may reasonably approve from time to time as the commercial manager of a Ship;

“Approved Flag” means the Bahamian, Cypriot, Maltese, Liberian, Panamanian, Singaporean or Marshall Islands flag or such other flag as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Ship shall be registered;

“Approved Management Agreement” means either an Approved Commercial Management Agreement or an Approved Technical Management Agreement as the context requires;

“Approved Manager” means either an Approved Commercial Manager or an Approved Technical Manager, as the context requires;

“Approved Technical Management Agreement” means, in relation to a Ship in respect of its technical management, a management agreement between the relevant Borrower and an Approved Technical Manager which shall be on the BIMCO Shipman 98 form or such other form of management agreement, in each case which the Agent may reasonably approve;

“Approved Technical Manager” means SSM or any other technical management company proposed by the Borrowers which the Agent may reasonably approve from time to time as technical manager of a Ship;

“Availability Period” means the period commencing on the Effective Date and ending on the earlier of:

(a)	November 30, 2012 (or such later date as the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld, conditioned or delayed), agree with the Borrowers); or
(b)	the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Bank Secrecy Act” means the United States Bank Secrecy Act of 1970, as amended;

“Business Day” means a day on which banks are open in Zurich, Switzerland; London, England; Stockholm, Sweden; Paris, France and New York, New York, U.S.A.;

“Balloon Installment” for each Tranche has the meaning set forth in Clause 8;

“Builder” means Hyundai Mipo Dockyard Co., Ltd., having its principal office at 1381 BANGEO-DONG, Dong-Gu, Ulsan 682-712, South Korea;

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“Capitalized Lease” means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with IFRS, is required to be capitalized on the balance sheet of such person; and “Capitalized Lease Obligation” is defined to mean the rental obligations, as aforesaid, under a Capitalized Lease;

“Cash Equivalents” means:

(a)	securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)	time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
c)	such other securities or instruments as the Majority Lenders shall agree in writing;

and in respect of both (a) and (b) above, with a Rating Category of at least “A+” by S&P and “A” by Moody’s (or the equivalent used by another Rating Agency) in each case having maturities of not more than ninety (90) days from the date of acquisition;

“Change of Control” means:

(a)	in respect of a Borrower, the occurrence of any act, event or circumstance that without prior written consent of the Majority Lenders results in the Guarantor owning directly or indirectly less than 100% of the issued and outstanding Equity Interests in such Borrower; and
(b)	in respect of the Guarantor, means:

(i)

a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than any holders of the Guarantor’s Equity Interests as of the date of this Agreement, becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act and including by reason of any change in the ultimate “beneficial ownership” of the Equity Interests of the Guarantor) of more than 35% of the total voting power of the Voting Stock of the Guarantor (calculated on a fully diluted basis); or

(ii)

individuals who at the beginning of any period of two consecutive calendar years constituted the Board of Directors or equivalent governing body of the Guarantor (together with any new directors (or equivalent) whose election by such Board of Directors or equivalent governing body or whose nomination for election was approved by a vote of at least two-thirds of the members of such Board of Directors or equivalent governing body then still in office who either were members of such Board of Directors or equivalent governing body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least 50% of the members of such Board of Directors or equivalent governing body then in office;

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“Charter” means, in relation to a Ship, any time or consecutive voyage charter or other contract for the employment in respect of such Ship, including, but not limited to, a contract of affreightment, for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

“Charter Assignment” means, in relation to a Ship, an assignment of the relevant Charter in the form set out in Appendix A;

“CISADA” means the United States Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010;

“Classification Society” means, in relation to a Ship, American Bureau of Shipping, Det Norske Veritas or such other vessel classification society that is a member of IACS that the Agent may approve from time to time;

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Collateral” means all property (including, without limitation, any proceeds thereof) referred to in the Finance Documents that is subject to any Security Interest in favor of the Security Trustee, for the benefit of the Lenders and the Swap Banks, securing the Secured Liabilities;

“Commission” or “SEC” means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act;

“Commitment” means, in relation to a Lender, the amount set forth opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Compliance Certificate” means a certificate executed by the Chief Financial Officer of the Guarantor in the form set out in Appendix B;

“Consolidated EBITDA” means, for any accounting period, the consolidated net income of the Guarantor for that accounting period:

(a) plus, to the extent deducted in computing the net income of the Guarantor for that accounting period, the sum, without duplication, of:

(i)	all federal, state, local and foreign income taxes and tax distributions;
(ii)	Consolidated Net Interest Expense;
(iii)	depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)	expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a Ship during such period; and
(v)	any drydocking expenses;

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(b) minus, to the extent added in computing the consolidated net income of the Guarantor for that accounting period, (i) any non-cash income or non-cash gains and (ii) any extraordinary gains on asset sales not in the ordinary course of business;

“Consolidated Funded Debt” means, for any accounting period, the sum of the following for the Guarantor determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:

(a)	all Financial Indebtedness; and
(b)	all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet);

provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt;

“Consolidated Liquidity” means, on a consolidated basis at any time, the sum of (a) cash, (b) Cash Equivalents, in each case held by the Guarantor on a freely available and unencumbered basis, and (c) available commitments under any revolving credit facilities extended to the Guarantor;

“Consolidated Net Interest Expense” means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Guarantor and all of its subsidiaries during the relevant accounting period less (i) commitment fees, (ii) interest income received and (iii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Guarantor;

“Consolidated Tangible Net Worth” means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Guarantor, minus goodwill;

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“Consolidated Total Capitalization” means Consolidated Tangible Net Worth plus Consolidated Funded Debt;

“Contract” means the Amber Contract, the Garnet Contract, the Ruby Contract and the Topaz Contract or any of them;

“Contract Installment Advance” means the Amber Contract Installment Advance, the Garnet Contract Installment Advance, the Ruby Contract Installment Advance and the Topaz Contract Installment Advance or any of them;

“Contract Price” means the Amber Contract Price, the Garnet Contract Price, the Ruby Contract Price and the Topaz Contract Price or any of them;

“Contractual Currency” has the meaning given in Clause 22.4;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Arranger, the Security Trustee, any Lender or any Swap Bank, whether as at the date of this Agreement or at any later time;

“Delivery Advance” means the Amber Delivery Advance, the Garnet Delivery Advance, the Ruby Delivery Advance and the Topaz Delivery Advance or any of them;

“Delivery Date” has the meaning given in Clause 9.2(b);

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a)	it is entered into by a Borrower with a Swap Bank:
(b)	its purpose is the hedging of the Borrowers’ exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Maturity Date; and
(c)	it is designated by the Borrowers, by delivery by the Borrowers to the Agent of a notice of designation in the form set out in Schedule 7 as a Designated Transaction for the purposes of the Finance Documents;

“Disbursement Authorization” has the meaning given in Clause 9.2(b);

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrowers for such Advance to be made, or (as the context requires) the date on which such Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 4 (or in any other form which the Agent approves or reasonably requires);

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“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning such Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) except to the extent that they fall within paragraph (b):

(i)	all freight, hire and passage moneys;
(ii)	compensation payable to such Borrower or the Security Trustee in the event of requisition of that Ship for hire;
(iii)	remuneration for salvage and towage services;
(iv)	demurrage and detention moneys;
(v)	damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
(vi)	all moneys which are at any time payable under Insurances in respect of loss of hire; and

(b) if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;

“Earnings Account” means each of the Amber Earnings Account, the Garnet Earnings Account, the Ruby Earnings Account and the Topaz Earnings Account or any of them;

“Earnings Assignment” means each of the Amber Earnings Assignment, the Garnet Earnings Assignment, the Ruby Earnings Assignment and the Topaz Earnings Assignment or any of them;

“EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system maintained by the SEC;

“Effective Date” means the date on which this Agreement is executed and delivered by the parties hereto;

“Environmental Claim” means:

(a)	any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
(b)	any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

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and “claim” means a claim for damages, compensation, indemnification, contribution, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a)	any release of Environmentally Sensitive Material from a Ship; or
(b)	any incident in which Environmentally Sensitive Material is released and which involves a collision or allision between a Ship and another vessel or object, or some other incident of navigation or operation, in any case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Borrower owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)	any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Borrower owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Equity Interests” of any person means:

(a)	any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)	all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person;

“Equity Proceeds” means the net cash proceeds from the issuance of common or preferred stock of the Guarantor (excluding the issuance of restricted stock);

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“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder;

“ERISA Affiliate” means a trade or business (whether or not incorporated) that, together with the Guarantor or any subsidiary of it, would be deemed to be a single employer under Section 414 of the Code;

“ERISA Funding Event” means:

(a)	any failure by any Plan to satisfy the minimum funding standards (for purposes of Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(b)	the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(c)	the failure by the Guarantor or any subsidiary of it or any ERISA Affiliate to make any required contribution to a Multiemployer Plan;
(d)	a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code);
(e)	the incurrence by the Guarantor or any subsidiary of it or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(f)	a determination that a Multiemployer Plan is, or is expected to be, in endangered status within the meaning of Section 432 of the Code or Section 305 of ERISA;

“ERISA Termination Event” means:

(a)	the imposition of any lien in favor of the PBGC of any Plan or Multiemployer Plan;
(b)	the receipt by the Guarantor or any subsidiary of it or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA;
(c)	the receipt by the Guarantor or any subsidiary of it or ERISA Affiliate of any notice that a Multiemployer Plan is in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA; or
(d)	the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA;

“Estate” has the meaning assigned such term in Clause 31.1(b)(ii);

“Event of Default” means any of the events or circumstances described in Clause 20.1;

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“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Executive Order” means an executive order issued by the President of the United States of America;

“Fair Market Value” means, in relation to a Ship, the market value of such Ship at any date that is shown by the average of two (2) valuations each prepared and addressed to the Agent:

(a)	as at a date not more than 30 days prior to the date such valuation is delivered to the Agent;
(b)	by Approved Brokers one of which shall be selected by the Agent, one of which shall be selected by the Borrowers;
(c)	with or without physical inspection of such Ship (as the Agent may require); and
(d)	on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (and with no value to be given to any pooling arrangements);

provided that (A) if a range of market values is provided in a particular appraisal, then the market value in such appraisal shall be deemed to be the mid-point within such range and (B) if an additional appraisal is obtained as provided in Clause 11.1(h), the market value of the Ship shall be the average of the three appraisals obtained; and provided further that if consented to by the Borrowers, the Agent shall have the option to have the market value of a Ship determined by a single Approved Broker selected by the Majority Lenders;

“Fee Letter” means each letter of even date herewith made between (inter alios) the Borrowers and the Agent in respect of certain fees payable under Clause 21.1;

“Finance Documents” means:

(a)	this Agreement;
(b)	all Charter Assignments;
(c)	the Account Pledge;
(d)	all Earnings Assignments;
(e)	all Insurance Assignments;
(f)	all Mortgages;
(g)	the Note;

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(h)	all Shares Pledges;
(i)	all Swap Assignments;
(j)	all Pre-delivery Security Assignments;
(k)	the Fee Letter; and
(l)	any other document (whether creating a Security Interest or not) which is executed at any time by any person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders and/or the Swap Banks under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, with respect to any person (the “Debtor”) at any date of determination (without duplication):

(a)	all obligations of the debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)	all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)	all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto);
(d)	all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)	all Capitalized Lease Obligations of the Debtor as lessee;
(f)	all Financial Indebtedness of persons other than the Debtor secured by a Security Interest on any asset of the Debtor, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness; and
(g)	all Financial Indebtedness of persons other than the Debtor under any guarantee, indemnity or similar obligation entered into by the Debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the Debtor.

The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations described in (f) and (g) above, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time, and (ii) Financial Indebtedness shall not include any liability for taxes;

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“Fiscal Year” means, in relation to any person, each period of one (1) year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared;

“Foreign Pension Plan” means any plan, fund (including without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Guarantor or any of the Borrowers or any one or more of their respective subsidiaries primarily for the benefit of employees of such Security Party or such subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code;

“Garnet Commercial Management Agreement” means an Approved Commercial Management Agreement for the Garnet Ship;

“Garnet Contract” means the shipbuilding contract dated June 2, 2011 made between Garnet and the Builder, as may be amended and supplemented from time to time, relating to the construction and sale by the Builder, and the purchase by Garnet of the Garnet Ship;

“Garnet Contract Assignment Consent and Acknowledgement” means the acknowledgement of notice of, and consent to, the assignment in respect of the Garnet Contract given or to be given in the form annexed to the Garnet Pre-delivery Security Assignment;

“Garnet Contract Installment Advance” means, in relation to the Garnet Ship, an Advance of a portion of the Total Commitment, in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in part payment of the fourth installment of the Garnet Contract Price due before the Delivery Date for the Garnet Ship;

“Garnet Contract Price” means the purchase price for the Garnet Ship under the Garnet Contract, being $37,405,500 or such lesser sum in Dollars as may be payable as the purchase price for the Garnet Ship by Garnet to the Builder pursuant to the Garnet Contract;

“Garnet Delivery Advance” means in relation to the Garnet Ship, an Advance of a portion of the Total Commitment in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in full the payment of the delivery installment of the Garnet Contract Price due on the Delivery Date for the Garnet Ship;

“Garnet Earnings Account” means, in relation to the Garnet Ship, an account in the name of Garnet with the Account Bank designated the Garnet - Earnings Account, or any other account which is designated by the Agent as the Garnet Earnings Account in relation to the Garnet Ship for the purpose of this Agreement;

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“Garnet Earnings Assignment” means in relation to the Garnet Ship, an assignment of the Earnings and any Requisition Compensation of the Garnet Ship, in the form set out in Appendix D;

“Garnet Insurance Assignment” means in relation to the Garnet Ship, an assignment of the Insurances applicable to the Garnet Ship in the form set out in Appendix K;

“Garnet Mortgage” means the first preferred mortgage to be executed by Garnet in favor of the Security Trustee in the form set out in Appendix E;

“Garnet Pre-delivery Security Assignment” means an assignment of the Garnet Contract and the Garnet Refund Guarantee in the form set out in Appendix F;

“Garnet Refund Guarantee” means each letter of guarantee issued or to be issued by the Refund Guarantor as amended and supplemented from time to time in favor of Garnet in respect of the Builder’s obligations under the Garnet Contract, each in the form required by the Garnet Contract, and any further guarantee(s) to be issued by the Refund Guarantor in respect of any agreement supplemental to the Garnet Contract, and any extension, renewal or replacement thereto or thereof.

“Garnet Refund Guarantee Assignment Consent and Acknowledgement” means in relation to each Garnet Refund Guarantee, an acknowledgement of notice of, and consent to, the assignment in respect of that Garnet Refund Guarantee given or to be given by the Refund Guarantor in the form annexed to the Garnet Pre-delivery Security Assignment;

“Garnet Ship” means the 52,000 dwt product tanker known on the date of this Agreement as Hull No. 2335 at the Builder’s yard, to be constructed and sold by the Builder to Garnet pursuant to Garnet Contract and to be registered on its Delivery Date in the ownership of the Garnet through the relevant Registry under the law of an Approved Flag with the name STI GARNET;

“Garnet Technical Management Agreement” means an Approved Technical Management Agreement for the Garnet Ship;

“Garnet Tranche” means a Tranche of the Total Commitment and the Loan of up to $23,000,000, comprising the “Garnet Contract Installment Advance and the Garnet Delivery Advance, or the aggregate principal amount of such Tranche outstanding at any relevant time;

“Guaranteed Obligations” has the meaning given in Clause 16.1;

“IACS” means the International Association of Classification Societies;

“IFRS” means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements;

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“Insurances” means in relation to a Ship:

(a)	all policies and contracts of insurance, including entries of such Ship in any protection and indemnity or war risks association, effected in respect of such Ship, the Earnings or otherwise in relation to such Ship; and
(b)	all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Insurance Assignment” means each of the Amber Insurance Assignment, the Garnet Insurance Assignment, the Ruby Insurance Assignment and the Topaz Insurance Assignment or any of them;

“Interest Period” means a period determined in accordance with Clause 6;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISM Code Documentation” includes, in respect of a Ship:

(a)	the Document of Compliance and Safety Management Certificate issued pursuant to the ISM Code in relation to such Ship within the periods specified by the ISM Code;
(b)	all other documents and data which are relevant to the safety management system and its implementation and verification which the Agent may require; and
(c)	any other documents which are prepared or which are otherwise relevant to establish and maintain such Ship’s compliance or the compliance of the Borrower owning such Ship or the relevant Approved Manager with the ISM Code which the Agent may require;

“ISPS Code” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time;

“ISPS Code Documentation” includes:

(a)	the ISSC; and
(b)	all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

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“Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” under its name on Schedule 1 or in the relevant Transfer Certificate pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent;

“LIBOR” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, such period which appears on Reuters Page LIBOR01 at or about 11:00 a.m. (London time) on the Quotation Date for the relevant period (and, for the purposes of this Agreement, “Reuters Page LIBOR01” means the display designated as “Page LIBOR01” on the Reuters Service or such other page as may replace Page LIBOR01 on that service for the purpose of displaying rates comparable to that rate or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars in the London interbank market);

“Loan” means the principal amount from time to time outstanding under this Agreement;

“Major Casualty” means, in relation to a Ship, any casualty to such Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency;

“Majority Lenders” means: (a) before the Loan has been made, Lenders whose Commitments total 66.67% or more of the Total Commitments; and (b) after the Loan has been made, Lenders whose Contributions total 66.67% or more of the Loan;

“Manager’s Undertaking” means, in relation to a Ship, the letter executed and delivered by an Approved Manager, in the form set out in Appendix G;

“Margin” means 2.70% per annum;

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the United States Federal Reserve System and any successor regulations thereto, as in effect from time to time;

“Master Agreement” means each master agreement on the 2002 ISDA (Multicurrency-Crossborder) form made or to be made between any of the Borrowers and a Swap Bank and includes all Designated Transactions from time to time and confirmations from time to time exchanged under any Master Agreement;

“Material Adverse Effect” means the existence of one or more events, conditions and/or contingencies that have had, or could reasonably be expected to have, (i) a material adverse effect on the business, operations, properties, assets, liabilities or financial condition of the Borrowers and the Guarantor, taken as a whole, or (ii) a material impairment of the validity or enforceability of, or a material impairment of the rights, remedies or benefits available to any Creditor Party under any of the Finance Documents;

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“Maturity Date” means for each Tranche, the earlier of the 28th Repayment Date for such Tranche and the date on which the Loan is accelerated pursuant to Clause 20.4;

“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors;

“Mortgage” means the Amber Mortgage, the Garnet Mortgage, the Ruby Mortgage and the Topaz Mortgage or any of them;

“Multiemployer Plan” means, at any time, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Guarantor or any subsidiary of it or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;

“Net Debt” means Financial Indebtedness less cash and Cash Equivalents;

“Non-indemnified Tax” means any tax on the net income of a Creditor Party (but not a tax on gross income or individual items of income), whether collected by deduction or withholding or otherwise, which is levied by a taxing jurisdiction which:

(a)	is located in the country under whose laws such entity is formed (or in the case of a natural person is a country of which such person is a citizen); or
(b)	with respect to any Lender, is located in the country of its Lending Office; or
(c)	with respect to any Creditor Party other than a Lender, is located in the country from which such party has originated its participation in this transaction;

“Note” means a promissory note of the Borrowers, payable to the order of the Agent, evidencing the aggregate indebtedness of the Borrowers under this Agreement, in the form set out in Appendix H;

“Notifying Lender” has the meaning given in Clause 24.1 or Clause 25.1 as the context requires;

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury;

“pari passu”, when used with respect to the ranking of any Financial Indebtedness of any person in relation to other Financial Indebtedness of such person, means that each such Financial Indebtedness:

(a) either (i) is not subordinated in right of payment to any other Financial Indebtedness of such person or (ii) is subordinate in right of payment to the same Financial Indebtedness of such person as is the other and is so subordinate to the same extent; and

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(b) is not subordinate in right of payment to the other or to any Financial Indebtedness of such person as to which the other is not so subordinate;

“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199);

“Payment Currency” has the meaning given in Clause 22.4;

“PBGC” means the Pension Benefits Guarantee Corporation and its successors;

“Permitted Security Interests” means:

(a)	Security Interests created by the Finance Documents;
(b)	pledges of certificates of deposit or other cash collateral securing any Borrower’s reimbursement obligations in connection with letters of credit now or hereafter issued for the account of such Borrower in connection with the establishment of the financial responsibility of such Borrower under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the case may be, as the same may be amended or replaced;
(c)	Security Interests to secure obligations under workmen’s compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen’s or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which any of the Borrowers is the principal, as to all of the foregoing, only to the extent arising and continuing in the ordinary course of business;
(d)	Security Interests for loss, damage or expense which are fully covered by insurance, subject to applicable deductibles reasonably satisfactory to the Agent;
(e)	Security Interests for unpaid but not past due master’s and crew’s wages in accordance with usual maritime practice;
(f)	Security Interests for salvage;
(g)	Security Interests arising by operation of law for not more than two (2) months’ prepaid hire under any charter or other contract of employment in relation to a Ship not prohibited by this Agreement or any other Finance Document;
(h)	Security Interests for master’s disbursements incurred in the ordinary course of trading of a Ship and any other Security Interests arising by operation of law or otherwise in the ordinary course of such Ship’s business, provided such Security Interests do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of Security Interests for repair or maintenance, to Clause 14.13(g);

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(i)	any Security Interest created in favor of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the relevant Borrower is actively prosecuting or defending such proceedings or arbitration in good faith and such Security Interest does not (and is not likely to) result in any sale, forfeiture or loss of the relevant Ship;
(j)	Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; and
(k)	Security Interests incidental to the conduct of the business of each Security Party or the ownership of such Security Party’s property and assets, which Security Interests do not in the aggregate materially detract from the value of each such Security Party’s property or assets or materially impair the use thereof in the operation of its business;

“Pertinent Document” means:

(a)	any Finance Document;
(b)	any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;
(c)	any other document contemplated by or referred to in any Finance Document; and
(d)	any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a)	the jurisdiction under the laws of which the company is incorporated or formed;
(b)	a jurisdiction in which the company has the center of its main interests or in which the company’s central management and control is or has recently been exercised;
(c)	a jurisdiction in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
(d)	a jurisdiction in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; or

21

(e) a jurisdiction the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company whether as a main or territorial or ancillary proceedings or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (a) or (b) above;

“Pertinent Matter” means:

(a)	any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or
(b)	any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Plan” means any employee benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which a Security Party or any subsidiary of it or ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice and/or the lapse of time would constitute an Event of Default;

“Pre-delivery Security Assignment” means the Amber Pre-delivery Security Assignment, the Garnet Pre-delivery Security Assignment, the Ruby Pre-delivery Security Assignment and the Topaz Pre-delivery Security Assignment or any of them;

“Principal Obligations” mean, in relation to a Borrower all monetary obligations (other than its Parallel Debt) which now or at any time hereafter may be or become due, owing or incurred by such Borrower to any Creditor Party, whether due or not, whether contingent or not and whether alone or jointly with others, as principal, surety or otherwise, under or in connection with or pursuant to the Finance Documents or any of the Master Agreements, as such obligations may be extended, restated, prolonged, amended, renewed or novated from time to time;

“Quarterly Payment Date” means March 31, June 30, September 30 and December 31 of each year during the term of the Loan;

“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is two (2) Business Days before the first day of that period, unless market practice differs in the London interbank market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Date will be the last of those days);

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“Rating Agencies” means:

(a)	S&P and Moody’s; or
(b)	if S&P or Moody’s or both of them are not making ratings of securities publicly available, a nationally recognized United States rating agency or agencies, as the case may be, selected by the Agent with the consent of the Majority Lenders, which will be substituted for S&P or Moody’s or both, as the case may be;

“Rating Category” means:

(a)	with respect to S&P, any of the following categories (any of which may include a “+” or “-”): AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);
(b)	with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(c)	the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable;

“Reference Bank” means the Agent;

“Refund Guarantee” means the Amber Refund Guarantee, the Garnet Refund Guarantee, the Ruby Refund Guarantee and the Topaz Refund Guarantee or any of them;

“Refund Guarantor” means the Korea Exchange Bank, Gye-Dong Branch of Seoul, South Korea or such other entity as the Agent (with the consent of the Majority Lenders) may reasonably approve in writing and includes its successors in title;

“Registry” means in respect of a Ship, such registrar, commissioner or representative of the relevant Approved Flag who is duly authorized to register such Ship, the relevant Borrower’s title to such Ship and the relevant Mortgage over such Ship under the laws of such Approved Flag;

“Reportable Event” means an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection 22, 23, 25, 27 or 28 of PBGC Regulation Section 4043;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Retention Account” means an account in the name of the Borrowers with the Account Bank in Paris, France designated Borrowers - Retention Account, or any other account which is designated by the Agent as the Retention Account for the purpose of this Agreement;

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“Retention Amount” means, in relation to any Retention Date, such sum as shall be the aggregate of:

(a)

one-third (1/3rd) of the repayment installment for a Tranche falling due for payment pursuant to Clause 8 (as the same may have been reduced by any prepayment) on the next Repayment Date for such Tranche after the relevant Retention Date; and

(b)

the applicable fraction (as hereinafter defined) of the aggregate amount of interest falling due to be paid in respect of such Tranche during and at the end of each current Interest Period at the relevant Retention Date and, for this purpose, the expression “applicable fraction” in relation to each Interest Period shall mean a fraction having a numerator of one and a denominator equal to the number of Retention Dates falling within the relevant Interest Period for such Tranche;

“Retention Dates” means the last day of each calendar month after the Drawdown Date of the Delivery Advance for a Tranche and prior to the Maturity Date for such Tranche;

“Ruby Commercial Management Agreement” means an Approved Commercial Management Agreement for the Ruby Ship;

“Ruby Contract” means the shipbuilding contract dated June 2, 2011 made between Ruby and the Builder, as may be amended and supplemented from time to time, relating to the construction and sale by the Builder, and the purchase by Ruby of the Ruby Ship;

“Ruby Contract Assignment Consent and Acknowledgement” means the acknowledgement of notice of, and consent to, the assignment in respect of the Ruby Contract given or to be given in the form annexed to the Ruby Pre-delivery Security Assignment;

“Ruby Contract Installment Advance” means, in relation to the Ruby Ship, an Advance of a portion of the Total Commitment, in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in part payment of the fourth installment of the Ruby Contract Price due before the Delivery Date for the Ruby Ship;

“Ruby Contract Price” means the purchase price for the Ruby Ship under the Ruby Contract, being $37,405,500 or such lesser sum in Dollars as may be payable as the purchase price for the Ruby Ship by Ruby to the Builder pursuant to the Ruby Contract;

“Ruby Delivery Advance” means in relation to the Ruby Ship, an Advance of a portion of the Total Commitment in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in full the payment of the delivery installment of the Ruby Contract Price due on the Delivery Date for the Ruby Ship;

“Ruby Earnings Account” means, in relation to the Ruby Ship, an account in the name of Ruby with the Account Bank designated the Ruby - Earnings Account, or any other account which is designated by the Agent as the Ruby Earnings Account in relation to the Ruby Ship for the purpose of this Agreement;

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“Ruby Earnings Assignment” means in relation to the Ruby Ship, an assignment of the Earnings and any Requisition Compensation of the Ruby Ship, in the form set out in Appendix D;

“Ruby Insurance Assignment” means in relation to the Ruby Ship, an assignment of the Insurances applicable to the Ruby Ship, in the form set out in Appendix K;

“Ruby Mortgage” means the first preferred mortgage to be executed by Ruby in favor of the Security Trustee in the form set out in Appendix E;

“Ruby Pre-delivery Security Assignment” means an assignment of the Ruby Contract and the Ruby Refund Guarantee in the form set out in Appendix F;

“Ruby Refund Guarantee” means each letter of guarantee issued or to be issued by the Refund Guarantor as amended and supplemented from time to time in favor of Ruby in respect of the Builder’s obligations under the Ruby Contract, each in the form required by the Ruby Contract, and any further guarantee(s) to be issued by the Refund Guarantor in respect of any agreement supplemental to the Ruby Contract, and any extension, renewal or replacement thereto or thereof.

“Ruby Refund Guarantee Assignment Consent and Acknowledgement” means in relation to each Ruby Refund Guarantee, an acknowledgement of notice of, and consent to, the assignment in respect of that Ruby Refund Guarantee given or to be given by the Refund Guarantor in the form annexed to the Ruby Pre-delivery Security Assignment;

“Ruby Ship” means the 52,000 dwt product tanker known on the date of this Agreement as Hull No. 2334 at the Builder’s yard, to be constructed and sold by the Builder to Ruby pursuant to the Ruby Contract and to be registered on its Delivery Date in the ownership of Ruby through the relevant Registry under the law of an Approved Flag with the name STI RUBY;

“Ruby Technical Management Agreement” means an Approved Technical Management Agreement for the Ruby Ship;

“Ruby Tranche” means a Tranche of the Total Commitment and the Loan of up to $23,000,000, comprising the Ruby Contract Installment Advance and the Ruby Delivery Advance, or the aggregate principal amount of such Tranche outstanding at any relevant time;

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies Inc., and its successors;

“SCM” means Scorpio Commercial Management S.A.M., a Monaco company, as commercial manager of the Ships;

“Secured Liabilities” means all liabilities which the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

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“Securities Act” means the United States Securities Act of 1933, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder;

“Security Interest” means:

(a)	a mortgage, encumbrance, charge (whether fixed or floating) or pledge, any maritime or other lien or privilege or any other security interest of any kind;
(b)	the security rights of a plaintiff under an action in rem; and
(c)	any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Maintenance Cover Ratio” has the meaning given in Clause 15.2;

“Security Party” means each of the Borrowers, the Guarantor and any other person (except a Creditor Party) who, as a surety, guarantor, mortgagor, assignor or pledgor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a Finance Document;

“Security Period” means the period commencing on the Effective Date and ending on the date on which:

(a)	all amounts which have become due for payment by the Borrowers or any other Security Party under the Finance Documents and the Master Agreements have been paid;
(b)	no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or any Master Agreement; and
(c)	neither the Borrowers nor any other Security Party has any liability under Clause 21, 22 or 23 or any other provision of this Agreement or another Finance Document or a Master Agreement;

“Servicing Bank” means the Agent or the Security Trustee;

“Shares Pledge” means a pledge by the Guarantor of the Equity Interests of each of the Borrowers, in the form set out in Appendix I;

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“Ship” means, as the context may require the Amber Ship, the Garnet Ship, the Ruby Ship or the Topaz Ship and “Ships” means any or all of them;

“SSM” means Scorpio Ship Management S.A.M., a Monaco company, as technical manager of the Ships;

“Swap Assignments” means an assignment by each of the Borrowers in favor of the Security Trustee of each of the Master Agreements to which it is a party in the form set out in Appendix J;

“Swap Counterparty” means, at any relevant time and in relation to a continuing Designated Transaction, the Swap Bank which is a party to that Designated Transaction;

“Swap Exposure” means, as at any relevant date and in relation to a Swap Counterparty, the amount certified by the Swap Counterparty to the Agent to be the aggregate net amount in Dollars which would be payable by each of the Borrowers to the Swap Counterparty under (and calculated in accordance with section 6(e) (Payments on Early Termination)) any of the Master Agreements entered into between the Swap Counterparty and each of the Borrowers if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between each of the Borrowers and the Swap Counterparty;

“Topaz Commercial Management Agreement” means an Approved Commercial Management Agreement for the Topaz Ship;

“Topaz Contract” means the shipbuilding contract dated June 2, 2011 made between Topaz and the Builder, as may be amended and supplemented from time to time, relating to the construction and sale by the Builder, and the purchase by Topaz of the Topaz Ship;

“Topaz Contract Assignment Consent and Acknowledgement” means the acknowledgement of notice of, and consent to, the assignment in respect of the Topaz Contract given or to be given in the form annexed to the Topaz Pre-delivery Security Assignment;

“Topaz Contract Installment Advance” means, in relation to the Topaz Ship, an Advance of a portion of the Total Commitment, in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in part payment of the fourth installment of the Topaz Contract Price due before the Delivery Date for the Topaz Ship;

“Topaz Contract Price” means the purchase price for the Topaz Ship under the Topaz Contract, being $37,405,500 or such lesser sum in Dollars as may be payable as the purchase price for the Topaz Ship by Topaz to the Builder pursuant to the Topaz Contract;

“Topaz Delivery Advance” means in relation to the Topaz Ship, an Advance of a portion of the Total Commitment in the maximum amount in Dollars specified in the “Advance Amount” column of Schedule 3 of this Agreement opposite the name of the relevant Advance and to be made to finance in full the payment of the delivery installment of the Topaz Contract Price due on the Delivery Date for the Topaz Ship;

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“Topaz Earnings Account” means, in relation to the Topaz Ship, an account in the name of Topaz with the Account Bank designated the Topaz - Earnings Account, or any other account which is designated by the Agent as the Topaz Earnings Account in relation to the Topaz Ship for the purpose of this Agreement;

“Topaz Earnings Assignment” means in relation to the Topaz Ship, an assignment of the Earnings and any Requisition Compensation of the Topaz Ship, in the form set out in Appendix D;

“Topaz Insurance Assignment” means in relation to the Topaz Ship, an assignment of the Insurances applicable to the Topaz Ship, in the form set out in Appendix K:

“Topaz Mortgage” means the first preferred mortgage to be executed by Topaz in favor of the Security Trustee in the form set out in Appendix E;

“Topaz Pre-delivery Security Assignment” means an assignment of the Topaz Contract and the Topaz Refund Guarantee in the form set out in Appendix F;

“Topaz Refund Guarantee” means each letter of guarantee issued or to be issued by the Refund Guarantor as amended and supplemented from time to time in favor of the Topaz in respect of the Builder’s obligations under the Topaz Contract, each in the form required by the Topaz Contract, and any further guarantee(s) to be issued by the Refund Guarantor in respect of any agreement supplemental to the Topaz Contract, and any extension, renewal or replacement thereto or thereof.

“Topaz Refund Guarantee Assignment Consent and Acknowledgement” means in relation to each Topaz Refund Guarantee, an acknowledgement of notice of, and consent to, the assignment in respect of that Topaz Refund Guarantee given or to be given by the Refund Guarantor in the form annexed to the Topaz Pre-delivery Security Assignment;

“Topaz Ship” means the 52,000 dwt product tanker known on the date of this Agreement as Hull No. 2333 at the Builder’s yard, to be constructed and sold by the Builder to Topaz pursuant to the Topaz Contract and to be registered on its Delivery Date in the ownership of the Topaz through the relevant Registry under the law of an Approved Flag with the name STI TOPAZ;

“Topaz Technical Management Agreement” means an Approved Technical Management Agreement for the Topaz Ship;

“Topaz Tranche” means a Tranche of the Total Commitment and the Loan of up to $23,000,000, comprising the “Topaz Contract Installment Advance and the Topaz Delivery Advance, or the aggregate principal amount of such Tranche outstanding at any relevant time;

“Total Loss” means in relation to a Ship:

(a)

actual, constructive, compromised, agreed or arranged total loss of such Ship;

(b)

any expropriation, confiscation, requisition or acquisition of such Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension), unless it is within one (1) month redelivered to the full control of the Borrower that is the owner thereof; or

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(c) any arrest, capture, seizure or detention of such Ship (including any hijacking or theft) unless it is within one (1) month redelivered to the full control of the Borrower that is the owner thereof;

“Total Loss Date” means in relation to a Ship:

(a)	in the case of an actual loss of such Ship, the date on which it occurred or, if that is unknown, the date when such Ship was last heard of;
(b)	in the case of a constructive, compromised, agreed or arranged total loss of such Ship, the earliest of:

(i)	the date on which a notice of abandonment is given to the insurers; and
(ii)	the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning such Ship with such Ship’s insurers in which the insurers agree to treat such Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it reasonably appears to the Agent that the event constituting the total loss occurred;

“Tranche” means the Amber Tranche, the Garnet Tranche, the Ruby Tranche and the Topaz Tranche or any of them;

“Transfer Certificate” has the meaning given in Clause 27.2;

“Transferee Lender” has the meaning given in Clause 27.2;

“Transferor Lender” has the meaning given in Clause 27.2;

“UCC” means the Uniform Commercial Code of the State of New York; and

“Voting Stock” of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.

1.2 Construction of certain terms. In this Agreement:

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“approved” means, for the purposes of Clause 13, approved in writing by the Agent;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any corporation, limited liability company, partnership, joint venture, unincorporated association, joint stock company and trust;

“consent” includes an authorization, consent, approval, resolution, license, exemption, filing, registration, notarization and legalization;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, email or fax;

“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of such Ship in consequence of its insured value being less than the value at which such Ship is assessed for the purpose of such claims;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any statute, regulation or resolution of the United States of America, any state thereof, the Council of the European Union, the European Commission, the United Nations or its Security Council or any other Pertinent Jurisdiction;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning such Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes natural persons; any company; any state, political sub-division of a state and local or municipal authority; and any international organization;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

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“protection and indemnity risks” means the usual risks covered by a protection and indemnity association, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law, of any governmental body, intergovernmental or supranational agency, department or regulatory, self-regulatory or other authority or organization;

“subsidiary” has the meaning given in Clause 1.4;

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement, any other Finance Document or any Master Agreement (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganization of it or any other person;

“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority or any other governmental authority authorized to levy such tax (including any such imposed in connection with exchange controls), and any related penalties, interest or fines; and

“war risks” includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a)	on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)	on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
	and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

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(a)	a majority of the issued Equity Interests in S (or a majority of the issued Equity Interests in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
(b)	P has direct or indirect control over a majority of the voting rights attaching to the issued Equity Interests of S; or
(c)	P has the direct or indirect power to appoint or remove a majority of the directors (or equivalent) of S; or
(d)	P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;
and any company of which S is a subsidiary is a parent company of S.

1.5 General interpretation. In this Agreement:

(a)	references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
(b)	references in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent approves or reasonably requires and which are acceptable to the Borrowers;
(c)	references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
(d)	words denoting the singular number shall include the plural and vice versa; and
(e)	Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6	Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
1.7	Accounting terms. Unless otherwise specified herein, all accounting terms used in this Agreement and in the other Finance Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to any Creditor Party under this Agreement shall be prepared, in accordance with IFRS as in effect on the Effective Date.
1.8	Inferences regarding materiality. To the extent that any representation, warranty, covenant or other undertaking of a Security Party in this Agreement or any other Finance Document is qualified by reference to those matters which are not reasonably expected to result in a Material Adverse Effect or language of similar import, no inference shall be drawn therefrom that any Creditor Party has knowledge or approves of any noncompliance by such Security Party with any law or regulation.

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2.	FACILITY
2.1	Amount of facility. Subject to the other provisions of this Agreement, the Lenders severally agree to make available to the Borrowers a loan facility in the principal amount of up to $92,000,000 in up to four (4) Tranches, one in respect of each Ship, and each Tranche being comprised of up to two (2) Advances. The maximum amount of the Advances comprising a Tranche shall not exceed $23,000,000 or such lesser amount as provided in this Agreement. The aggregate amount of the Tranches shall not exceed $92,000,000 or such lesser amount as provided in this Agreement.
2.2	Lenders’ participations in Advance. Subject to the other provisions of this Agreement, each Lender shall participate in an Advance in the proportion which its Commitment bears to the Total Commitments.
2.3	Purpose of Advance. The Borrowers undertake with each Creditor Party to use each Advance only to finance the relevant Contract Installment Advance or Delivery Installment Advance due under the relevant Contract. No Creditor Party shall have any responsibility for the application of any Advance by the Borrowers.
2.4	Reduction and cancellation of Total Commitments. (a) Upon not less than three (3) Business Days written notice to the Agent, the Borrowers may reduce any unused Commitment. (b) Any portion of the Total Commitments not disbursed to the Borrowers shall be cancelled and terminated automatically on the expiration of the Availability Period.
3.	POSITION OF THE LENDERS
3.1	Interests several. The rights of the Lenders and the Swap Banks under this Agreement and under the Master Agreement are several.
3.2	Individual right of action. Each Lender and each Swap Bank shall be entitled to sue for any amount which has become due and payable by a Security Party to it under this Agreement without joining the Agent, the Security Trustee or any other Lender or any other Swap Bank as additional parties in the proceedings.
3.3	Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.
3.4	Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under any Master Agreements to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreements to which it is a party shall not result in:

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(a)	the obligations of the other Lenders or Swap Banks being increased; nor
(b)	the Borrowers, any other Security Party, any other Lender or any other Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document or under any Master Agreement,

	and in no circumstances shall a Lender or a Swap Bank have any responsibility for a failure of another Lender or Swap Bank to perform its obligations under this Agreement or a Master Agreement.
3.5	Replacement of a Lender.

(a) If at any time:

(i)	any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or
(ii)	the Borrowers or any other Security Party becomes obliged in the absence of an Event of Default to repay any amount in accordance with Clause 24 or to pay additional amounts pursuant to Clause 23 or Clause 25 to any Lender in excess of amounts payable to other Lenders generally,

then the Borrowers may, on 30 Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrowers, which is acceptable to the Agent, which confirms its willingness to assume and by its execution of a Transfer Certificate does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Advances and all accrued interest and/or breakages costs and other amounts payable in relation thereto under the Finance Documents.

(b)

The replacement of a Lender pursuant to this Clause 3.5 shall be subject to the following conditions:

(i)	the Borrowers shall have no right to replace the Agent or the Security Trustee;
(ii)	neither the Agent nor any Lender shall have any obligation to the Borrowers to find a Replacement Lender;

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(iii)	in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 30 Business Days after the date the Borrowers notifies the Non-Consenting Lender and the Agent of their intent to replace the Non-Consenting Lender pursuant to Clause 3.5(a); and
(iv)	in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(c) For purposes of this Clause 3.5, in the event that:

(i)	the Borrowers or the Agent have requested the Lenders to give a consent in relation to or to agree to a waiver or amendment of any provisions of the Finance Documents;
(ii)	the consent, waiver or amendment in question requires the approval of all Lenders; and
(iii)	Lenders whose Commitments aggregate more than 50.00% percent of the Total Commitments have consented to or agreed to such waiver or amendment,

	then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.
4.	DRAWDOWN
4.1	Request for Advance. Subject to the following conditions, the Borrowers may request an Advance to be made by delivering to the Agent a completed Drawdown Notice for such Advance not later than 11:00 a.m. (New York time) three (3) Business Days prior to the intended Drawdown Date for such Advance.
4.2	Availability. The conditions referred to in Clause 4.1 are that:

(a)	the Drawdown Date must be a Business Day during the Availability Period;
(b)	the amount of the Advance shall not exceed the amount of such Advance set forth in Schedule 3 provided, however, that if the Contract Price for the relevant Ship is reduced then the amount of such Advance shall not exceed the relevant percentage for such Advance set forth in Schedule 3 and shall be used only to partially finance the acquisition of the Ship pursuant to the relevant Contract; and
(c)	the applicable conditions precedent stated in Clause 9 hereof shall have been satisfied or waived as provided therein.

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4.3 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a)	the amount of the Advance and the Drawdown Date;
(b)	the amount of that Lender’s participation in the Advance; and
(c)	the duration of the first Interest Period.

4.4	Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorized attorney-in-fact of each of the Borrowers and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5	Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, before 10:00 a.m. (New York City time) on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender under Clause 2.2.
4.6	Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrowers shall be made:

(a)	to the account of the Builder which the Borrowers specify in the Drawdown Notice; and
(b)	in the like funds as the Agent received the payments from the Lenders.

4.7	Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 to the account of a third party designated by the Borrowers in a Drawdown Notice shall constitute the making of the Advance and the Borrowers shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.
4.8	Promissory note.

(a)	The obligation of the Borrowers to pay the principal of, and interest on, the Loan shall be evidenced by the Note, which shall be dated the date of the Drawdown Date of the initial Advance.
(b)	Each Advance made by the Lenders to the Borrowers may be evidenced by a notation of the same made by the Agent on the grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of the relevant Advance.
(c)	Each Lender shall record on its internal records the amount of its participation in the relevant Advance and each payment in respect thereof, and the unpaid balance of such participation in such Advance shall, absent manifest error and to the extent not inconsistent with the notations made by the Agent on the grid attached to the Note, be as so recorded.

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(d)

The failure of the Agent or any Lender to make any such notation shall not affect the obligation of the Borrowers in respect of any Advance or the Loan nor affect the validity of any transfer by the Agent of the Note.

(e)

On receipt of satisfactory evidence that the Note has been lost, mutilated or destroyed and on surrender of the remnants thereof, if any, the Borrowers shall promptly replace the Note, without charge to the Creditor Parties, with a similar Note. If such replacement Note replaces a lost Note it shall bear an endorsement to that effect. Any lost Note subsequently found shall be surrendered to the Borrowers and cancelled.  The Agent shall indemnify the Borrowers from any losses, claims or damages resulting from the loss of such Note.

5.	INTEREST
5.1	Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance of the Loan in respect of an Interest Period shall be the aggregate of the Margin and LIBOR, for that Interest Period.
5.2	Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.
5.3	Payment of accrued interest. In the case of an Interest Period longer than three (3) months, accrued interest shall be paid every three (3) months during that Interest Period and on the last day of that Interest Period.
5.4	Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrowers and each Lender of:

(a)	each rate of interest; and
(b)	the duration of each Interest Period (as determined under Clause 6.2), as soon as reasonably practicable after each is determined.

5.5	Notice of prepayment. If the Borrowers do not agree with an interest rate notified by the Agent under Clause 5.4, the Borrowers may give the Agent not less than ten (10) Business Days’ notice of its intention to prepay (without premium or penalty) the Loan at the end of the interest period set by the Agent.
5.6	Prepayment; termination of Commitments. A notice under Clause 5.5 shall be irrevocable; the Agent shall promptly notify the Lenders of the Borrowers’ notice of intended prepayment and:

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(a)	on the date on which the Agent serves that notice, the Total Commitments shall be cancelled; and
(b)	the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon plus any sums payable pursuant to Clause 22.1(b).

5.7	Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.
5.8	Market disruption.

(a) If with respect to any Interest Period:

(i)	the Agent determines that LIBOR is not available for such Interest Period;
(ii)	at least one (1) Business Day prior to the start of such Interest Period, Lenders owning or holding Contributions in the aggregate greater than or equal to 50% of the Loan (or if the Loan has not been made, Commitments in the aggregate greater than or equal to 50% of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part thereof) during the Interest Period in the relevant interbank market at or about 11:00 a.m. (London time) on the Quotation Date for such Interest Period; or
(iii)	at least one (1) Business Day prior to the start of such Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London interbank market in order to fund its Contribution (or any part thereof) during such Interest Period,

then the Agent shall promptly notify the Borrowers and each of the Lenders stating the circumstances falling within this Clause 5.8(a) which have caused its notice to be given and shall provide the Borrowers with reasonably available details in connection with such circumstances;

(b)

After the Agent’s notice under clause 5.8(a) is served the Borrowers, the Agent, the Lenders or (as the case may be) the Affected Lender shall use reasonable commercial endeavours in good faith and fair dealing, to agree, within the thirty (30) days after the date on which the Agent serves its notice under clause 5.8(a) (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

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(c)	Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.
(d)	If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender for each one month period, set an interest rate representing the actual cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars of their or its Contribution plus the Margin.  Such alternative pricing agreed upon pursuant to this Clause 5.8(d) shall be binding on all parties hereto.  The procedure provided for by this Clause 5.8 shall be repeated if the relevant circumstances are continuing at the end of each one month period.
(e)	If the Borrowers do not agree with the interest rate set by the Agent under this Clause 5.8, the Borrowers may give the Agent not less than seven (7) Business Days’ notice of their intention to prepay the Loan.
(f)	A notice by the Borrowers under Clause 5.8(e) shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers’ notice of intended prepayment; and

(i)	on the date on which the Agent serves the notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and
(ii)	the Borrowers shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon plus any sums payable pursuant to Clause 22.1(b).

6.	INTEREST PERIODS
6.1	Commencement of Interest Periods. The first Interest Period applicable to an Advance of a Tranche shall commence on the Drawdown Date of such Advance and each subsequent Interest Period for such Tranche shall commence on the expiry of the preceding Interest Period.
6.2	Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

(a)	three (3) or six (6) months as notified by the Borrowers to the Agent not later than 10:00 A.M. (New York time) three (3) Business Days before commencement of the Interest Period;
(b)	the initial Interest Period for the Delivery Advance for a Ship shall end on the same day as the then current Interest Period for the Contract Installment Advance for such Ship and, on such day, both Advances for such Ship shall be consolidated into, and thereafter constitute, the Tranche for such Ship;

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(c)	three (3) months if the Borrowers fail to notify the Agent by the time specified in paragraph (a); or
(d)	such other period as the Agent may, with the authorization of the Majority Lenders, agree with the Borrowers.

6.3	Duration of Interest Periods for repayment installments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.
6.4	Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected and the Lenders have agreed an Interest Period longer than three (3) months, any Lender notifies the Agent by 11:00 a.m. (New York time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London interbank market when the Interest Period commences, the Interest Period shall be three (3) months.
7.	DEFAULT INTEREST
7.1	Payment of default interest on overdue amounts. A Security Party shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by such Security Party under any Finance Document which the Agent, the Security Trustee or any other designated payee does not receive on or before the relevant date, that is:

(a)	the date on which the Finance Documents provide that such amount is due for payment; or
(b)	if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
(c)	if such amount has become immediately due and payable under Clause 20.4, the date on which it became immediately due and payable.

7.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.00 percent above:

(a)	in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or
(b)	in the case of any other overdue amount, the rate set out at Clause 7.3(b).

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

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(a)	the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period); and
(b)	the Margin plus, in respect of successive periods of any duration (including at call) up to three (3) months which the Agent may, with the consent of the Majority Lenders, select from time to time:

(i)	LIBOR; or
(ii)	if the Agent determines that Dollar deposits for any such period are not being made available by leading banks in the London interbank market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the actual cost of funds to the Lenders from such other sources as the Agent may from time to time reasonably determine.

7.4	Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and each relevant Security Party of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that such Security Party is liable to pay such interest only with effect from the date of the Agent’s notification.
7.5	Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.
7.6	Application to Master Agreement. For the avoidance of doubt, this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transactions as to which the terms with respect to default interest of the Master Agreement shall apply.
8.	REPAYMENT AND PREPAYMENT
8.1	Amount of repayment installments. Subject to the provisions of Clause 8.9, the Borrowers shall repay each Tranche of the Loan by 28 consecutive quarterly installments the first of which shall be in an amount equal to $375,000 multiplied by a fraction the numerator of which shall be the number of days between the Delivery Date for the Ship and the first Quarterly Payment Date falling after such Delivery Date to which such Tranche relates and the denominator of which shall be the number of days in the current calendar quarter in which the relevant Ship was delivered and the second through twenty eighth of which shall be in the amount of $375,000 each, together with a balloon payment in the amount of the outstanding principal balance of such Tranche (the “Balloon Installment”) payable concurrently with the last repayment installment, provided that if the aggregate amount of such Advances for such Tranche is for an amount less than $23,000,000, the installments and the Balloon Installment for such Tranche shall be reduced pro-rata in such amount as shall be advised by the Agent to the Borrowers in writing.

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8.2	Repayment Dates. The first repayment installment for a Tranche shall be paid on the first Quarterly Payment Date falling after the Drawdown Date for the Delivery Advance of such Tranche and the last installment on the Maturity Date for such Tranche.
8.3	Maturity Date. On the Maturity Date for the Delivery Advance of such Tranche, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document with respect to such Tranche and on the Maturity Date for the last Tranche to be repaid, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.
8.4	Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of a Tranche of the Loan on the last day of an Interest Period without premium or penalty.
8.5	Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a)	a partial prepayment shall be $500,000 or a multiple of $500,000;
(b)	the Agent has received from the Borrowers at least five (5) Business Days’ prior written notice specifying the amount to be prepaid for such Tranche, the description of the repayment installments against which such voluntary prepayment is to be applied and the date on which the prepayment is to be made; and
(c)	the Borrowers have complied with clause 8.12 on or prior to the date of prepayment.

8.6	Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorization of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.
8.7	Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c).
8.8	Application of partial prepayment. Each partial prepayment shall be applied against the repayment installments for the relevant Tranche or Tranches in accordance with the Borrower’s instructions contained in the notice of prepayment issued in accordance with Clause 8.5(b).

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8.9 Mandatory prepayment. If a Ship is sold or refinanced by banks and/or financial institutions that are not parties to this Agreement, or if a Ship becomes a Total Loss, the Borrowers shall prepay the Tranche related to such Ship in full:

(a)	in the case of a sale, on or before the date on which the sale is completed by delivery of the Ship to the buyer;
(b)	in the case of a refinancing, on or before the date on which the refinancing is completed; or
(c)	in the case of a Total Loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

8.10 Amounts payable on prepayment. A voluntary prepayment under Clause 8.4 and a mandatory prepayment under Clause 8.9 shall be made together with:

(a)	accrued interest (and any other amount payable under Clause 22 or otherwise) in respect of the amount prepaid; and
(b)	if the prepayment is not made on the last day of an Interest Period, any sums payable under Clause 22.1(b), but without premium or penalty.

8.11	No reborrowing. No amount prepaid may be reborrowed.
8.12	Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan or any Tranche thereof under Clause 8 or any other provision of this Agreement, the Borrowers shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortization) exceed the amount of the Loan or the relevant Tranche thereof as reducing from time to time thereafter pursuant to Clause 8.1.
8.13	Release of Borrower. Upon the full prepayment or repayment of all Advances relating to a Tranche or the voluntary cancellation of all Commitments (provided there is no outstanding portion of the Advances relating to such Tranche) relating to a Tranche pursuant to the terms of this Agreement, the Creditor Parties agree, at the expense of the relevant Borrower, to execute all such documents as such Borrower may reasonably require to discharge the Finance Documents relating to such Borrower and its Ship and such Borrower shall be released as a Borrower from under this Agreement.
9.	CONDITIONS PRECEDENT
9.1	Documents, fees and no default. Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:

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(a)	on or before the Effective Date, the Agent shall have received or is satisfied it will receive the documents described in Part A of Schedule 5 in form and substance satisfactory to the Agent;
(b)	that, on or before the service of the Drawdown Notice for a Contract Installment Advance for a Ship, the Agent shall have received:

(i)

the documents described in Part B of Schedule 5 in form and substance satisfactory to the Agent; and

(ii)

such documentation and other evidence as is reasonably requested by the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary “know your customer” or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement and the other Finance Documents, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the requirements of the PATRIOT Act;

(c)	that, on or prior to the Drawdown Date of the Delivery Advance for a Ship but prior to the making of such Advance, the Agent shall have received or is satisfied that it will receive on the making of such Advance the documents described in Part C of Schedule 5 in form and substance satisfactory to it;
(d)	that, on or before the service of the first Drawdown Notice, the Agent shall have received any accrued commitment fee payable pursuant to Clause 21.1and has received payment of the expenses referred to in Clause 21.2; and
(e)	that both at the date of each Drawdown Notice and at each Drawdown Date:

(i)	no Event of Default or Potential Event of Default has occurred or would result from the borrowing of such Advance;
(ii)	the representations and warranties in Clause 10 and those of the Borrowers or any other Security Party which are set out in the other Finance Documents (other than those relating to a specific date) would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing, provided that the requirements of this Clause 9.1(e)(ii) shall apply in respect of the representations and warranties in Clause 10.24 only as of the Delivery Date of the relevant Ship;
(iii)	none of the circumstances contemplated by Clause 5.8 has occurred and is continuing, unless the Agent is satisfied that an alternate rate of interest can be set pursuant to Clause 5.8; and

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(iv) there has been no material change in the consolidated financial condition, operations or business prospects of the Guarantor since the date on which the Guarantor provided information concerning those topics to the Agent and/or any Lender;

(f)	that, on the Delivery Date of the first Ship to be delivered and thereafter if the Security Maintenance Cover Ratio were applied immediately following the making of such Advance, the Borrowers would not be required to provide additional Collateral or prepay part of the Loan under Clause 15; and
(g)	that the Agent has received, and found to be reasonably acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorization of the Majority Lenders, reasonably request by notice to the Borrowers prior to the Drawdown Date.

9.2 Waiver of conditions precedent. Notwithstanding anything in Clause 9.1 to the contrary:

(a)	if the Agent, with the consent of the Majority Lenders, permits an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that such conditions are satisfied within ten (10) Business Days after such Drawdown Date (or such longer period as the Agent may specify).
(b)	each Delivery Advance may be borrowed before the applicable conditions set forth in clause 9.1 are satisfied and:

(i)

each Lender agrees to fund its Contribution on the Drawdown Date requested by the Borrowers, which day shall not be more than three (3) Business Days prior to the date of the scheduled acquisition and delivery of such Ship (such date, the “Delivery Date”); and

(ii)

the Agent shall on the date on which such Delivery Advance is funded (or as soon thereafter as practicable) (A) preposition an amount equal to the aggregate principal amount of such Delivery Advance at the bank or financial institution designated by the Builder in the relevant Contract (“Builder’s Bank”), which funds shall be held at Builder’s Bank in the name and under the sole control of the Agent or one of its Affiliates and (B) issue a SWIFT MT 199 or other similar communication (each such communication, a “Disbursement Authorization”) authorizing the release of such funds by the Builder’s Bank on the relevant Delivery Date upon receipt of a Protocol of Delivery and Acceptance in respect of such Ship duly executed by the Builder and the relevant Borrower and countersigned by a representative of the Agent;

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Provided, that if delivery of such Ship does not occur within fifteen (15) Business Days after the scheduled Delivery Date, the funds held at the Builder’s Bank shall be released to the Agent for further disbursement to the Lenders.

For the avoidance of doubt, the parties hereto acknowledge and agree that:

(1)	the date on which the Lenders fund such Delivery Advance constitutes the Drawdown Date in respect of such Delivery Advance and all interest and fees thereon shall accrue from such date;
(2)	the Agent and the Lenders suspend fulfillment of the conditions precedent set forth in Schedule 5, Part C, Paragraphs 7, 10, 12, 13, 14 and 15 solely for the period on and between such Drawdown Date and the relevant Delivery Date and the Borrowers acknowledge and agree that such conditions precedent must be fulfilled to the satisfaction of the Agent or the Agent must be satisfied that such conditions will be fulfilled immediately thereafter before the Agent will instruct its representative to countersign the Protocol of Delivery and Acceptance referred to in clause 9.2(b)(ii);
(3)	from the date the proceeds of the Delivery Advance are deposited at the Builder’s Bank to the Delivery Date (or, if delivery of such Ship does not occur within the time prescribed in the Disbursement Authorization, the date on which the funds are returned to the Agent for further distribution to the Lenders), the Borrowers shall be entitled to interest on such Delivery Advance at the applicable rate, if any, paid by the Builder’s Bank for such deposited funds;
(4)	if such Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of such Delivery Advance are returned to the Agent and distributed to the Lenders, (i) the Borrowers shall pay all accrued interest and fees in respect of such returned proceeds on the date such proceeds are returned to the Agent and (ii) the relevant available Commitment will be increased by an amount equal to the aggregate principal amount of the Loan proceeds so returned; and
(5)	if the Borrowers have instructed the Agent to convert the aggregate principal amount of such Delivery Advance borrowed into a currency other than Dollars for deposit with the Builder’s Bank and such Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of such Delivery Advance are returned to the Agent for further distribution to the Lenders, the Agent shall convert the aggregate amount of funds so returned back into Dollars and if such funds are less than the Dollar amount of the aggregate principal amount of such Delivery Advance incurred on the relevant Drawdown Date, the Borrowers shall immediately repay the difference and, in any event, the Borrowers shall pay any and all fees, charges and expenses arising from such conversion.

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10.	REPRESENTATIONS AND WARRANTIES
10.1	General. Each of the Borrowers and the Guarantor represents and warrants to each Creditor Party as of the Effective Date and each Drawdown Date as follows.
10.2	Status. Each Security Party is:

(a)

duly incorporated or formed and validly existing and in good standing under the law of its jurisdiction of incorporation or formation; and

(b)

duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a material adverse effect on its business, assets or financial condition or which may affect the legality, validity, binding effect or enforceability of the Finance Documents, and there are no proceedings or actions pending or contemplated by any Security Party, or to the knowledge of the Borrowers or the Guarantor contemplated by any third party, seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property.

10.3 Company power; consents. Each Security Party has the capacity and has taken all action, and no consent of any person is required, for:

(a)	it to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted;
(b)	it to execute each Finance Document and each Master Agreement to which it is or is to become a party;
(c)	it to purchase and pay for the Ship to be acquired by it under the relevant Contract and register such Ship in its name under an Approved Flag;
(d)	it to comply with its obligations under each Finance Document and the Master Agreements to which it is or is to become a party;
(e)	it to grant the Security Interests granted or to be granted by it pursuant to the Finance Documents to which it is or is to become a party;

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(f)	the perfection or maintenance of the Security Interests created by the Finance Documents (including the first priority nature thereof); and
(g)	the exercise by any Creditor Party of their rights under any of the Finance Documents or the Master Agreements or the remedies in respect of the Collateral pursuant to the Finance Documents or the Master Agreements to which it is or is to become a party,
	except, in each case, for consents which have been duly obtained, taken, given or made and are in full force and effect.

10.4	Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation.
10.5	Title.

(a)

Each Borrower owns in the case of owned personal property, good and valid title to, or, in the case of leased personal property, valid and enforceable leasehold interests in, all of its properties and assets, tangible and intangible, of any nature whatsoever, free and clear in each case of all Security Interests or claims, except for Permitted Security Interests.

(b)

Each Borrower has not created nor is it contractually bound to create any Security Interest on or with respect to any of its assets, properties, rights or revenues, except for Permitted Security Interests, and except as provided in this Agreement each Borrower is not restricted by contract, applicable law or regulation or otherwise from creating Security Interests on any of its assets, properties, rights or revenues.

10.6 Legal validity; effective Security Interests. Subject to any relevant insolvency laws affecting creditors’ rights generally:

(a)	the Finance Documents and the Master Agreements to which each Security Party is a party, constitute or, as the case may be, will constitute upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), such Security Party’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and
(b)	the Finance Documents to which each Security Party is a party, creates or, as the case may be, will create upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate.

10.7 No third party Security Interests. Without limiting the generality of Clauses10.5 and 10.6, at the time of the execution and delivery of each Finance Document:

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(a)	the relevant Security Party will have the right to create all the Security Interests which that Finance Document purports to create; and
(b)	no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8 No conflicts. The execution of each Finance Document and each Master Agreement, the borrowing of each Advance, and compliance with each Finance Document and the Master Agreements, will not involve or lead to a contravention of:

(a)	any law or regulation; or
(b)	the constitutional documents of any Security Party; or
(c)	any contractual or other obligation or restriction which is binding on any Security Party or any of its assets.

10.9 Taxes.

(a)	All payments which a Security Party is liable to make under the Finance Documents and the Master Agreements to which it is a party can properly be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
(b)	Each Security Party has timely filed or has caused to be filed all tax returns and other reports that it is required by law or regulation to file in any Pertinent Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in any Pertinent Jurisdiction, other than taxes and charges:

(i)	which (A) are not yet due and payable or (B) are being contested in good faith by appropriate proceedings and for which adequate reserves have been established and as to which such failure to have paid such tax does not create any risk of sale, forfeiture, loss, confiscation or seizure of the Ship or of criminal liability; or
(ii)	the non-payment of which could not reasonably be expected to have a material adverse effect on the financial condition of such Security Party.

	The charges, accruals, and reserves on the books of each Security Party respecting taxes are adequate in accordance with IFRS.
(c)	No material claim for any tax has been asserted in writing against a Security Party by any Pertinent Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in the most recent balance sheet of such person or disclosed in the notes thereto, if any.

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(d)	The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents and the Master Agreements and the consummation of the transactions contemplated thereby will not cause any of the Creditor Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in any Pertinent Jurisdiction.
(e)	No taxes are required by any governmental authority in any Pertinent Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document and the Master Agreements.
(f)	The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents and the Master Agreements by any of the Creditor Parties will not cause such Creditor Party to be deemed to be resident, domiciled or carrying on business in any Pertinent Jurisdiction of any Security Party or subject to taxation under any law or regulation of any governmental authority in any Pertinent Jurisdiction of any Security Party.
(g)	Other than the recording of the Mortgages in accordance with the laws of the Approved Flag and such filings as may be required in a Pertinent Jurisdiction in respect of certain of the Finance Documents, and the payment of fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.

10.10	No default. No Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance.
10.11	Information. All financial statements, information and other data furnished by or on behalf of a Security Party to any of the Creditor Parties:

(a)	was true and accurate at the time it was given;
(b)	such financial statements, if any, have been prepared in accordance with IFRS and accurately and fairly represent the financial condition of such Security Party as of the date or respective dates thereof and the results of operations of such Security Party for the period or respective periods covered by such financial statements;
(c)	there are no other facts or matters the omission of which would have made or make any such information false or misleading;
(d)	there has been no material adverse change in the financial condition, operations or business prospects of any Security Party since the date on which such information was provided other than as previously disclosed to the Agent in writing; and

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(e) none of the Security Parties has any contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate except as disclosed in such statements, information and data.

10.12	No litigation. No legal or administrative action involving a Security Party (including any action relating to any alleged or actual breach of the ISM Code, the ISPS Code or any Environmental Law) has been commenced or taken by any person, or, to the Borrowers’ or the Guarantor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the business, assets or financial condition of a Security Party or which may affect the legality, validity, binding effect or enforceability of the Finance Documents and the Master Agreements.
10.13	ISM Code and ISPS Code compliance. The relevant Borrower has obtained or will obtain or will cause to be obtained all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ship to be owned by it and its operation and will be or will cause such Ship and the Approved Manager to be in full compliance with the ISM Code and the ISPS Code.
10.14	Validity and completeness of Contracts. Each Contract constitutes valid, binding and enforceable obligations of the Borrower that is a party thereto and, to the Borrower’s knowledge the Builder in accordance with its terms and;

(a)	the copy of such Contract delivered to the Agent is a true and complete copy; and
(b)	no material amendment or additions to such Contract have been agreed (without any such material amendments or additions being disclosed to the Agent) nor has the relevant Borrower or Builder waived any of its rights under such Contract.

10.15	No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to any Borrower, Guarantor, any Affiliate of such Borrower, or any third party in connection with a Contract, other than as provided in such Contract and disclosed to the agent in writing.
10.16	Compliance with law; Environmentally Sensitive Material. Except to the extent the following could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of any Security Party, or affect the legality, validity, binding effect or enforceability of the Finance Documents:

(a)

the operations and properties of each Security Party complies with all applicable laws and regulations, including without limitation Environmental Laws, all necessary Environmental Permits have been obtained and are in effect for the operations and properties of such Security Party and each Security Party is in compliance in all material respects with all such Environmental Permits; and

(b)

none of the Security Parties has been notified in writing by any person that it or any of its subsidiaries or Affiliates is potentially liable for the remedial or other costs with respect to treatment, storage, disposal, release, arrangement for disposal or transportation of any Environmentally Sensitive Material, except for costs incurred in the ordinary course of business with respect to treatment, storage, disposal or transportation of such Environmentally Sensitive Material.

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10.17 Ownership structure.

(a)	The Borrowers have no subsidiaries.
(b)	100% of the Equity Interests of each of the Borrowers have been validly issued, is fully paid, non-assessable and free and clear of all Security Interests other than Permitted Security Interests and are owned beneficially and of record by the Guarantor.
(c)	None of the Equity Interests of each of the Borrowers is subject to any existing option, warrant, call, right, commitment or other agreement of any character to which such Borrower is a party requiring, and there are no Equity Interests of such Borrower outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional Equity Interests of such Borrower or other Equity Interests convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests of such Borrower.

10.18 Pension Plans. (a) On the Effective Date, no Security Party is a party to any Plan or Multiemployer Plan or Foreign Pension Plan.

(b)	The execution and delivery of this Agreement and the consummation of the transaction hereunder will not constitute a non-exempt “prohibited transaction” for the purpose of Section 406 of ERISA or Section 4975 of the Code.
(c)	No ERISA Termination Event has occurred.
(d)	No ERISA Funding Event exists or has occurred.

10.19	Margin Stock. None of the Borrowers is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.
10.20	Investment company, public utility, etc. Each of the Borrowers is not:

(a)	an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended; or
(b)	a “public utility” within the meaning of the United States Federal Power Act of 1920, as amended.

10.21 Asset Control.

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(a)	Neither the Borrowers nor the Guarantor is a “national” of any “designated foreign country”, within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the United States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as amended, or a “specially designated national” listed by OFAC, or any regulations or rulings issued thereunder.
(b)	Neither the making of an Advance nor the use of the proceeds thereof nor the performance by each of the Borrowers or the Guarantor of its obligations under any of the Finance Documents to which it is a party violates any law, regulation or Executive Order restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there.
(c)	Neither the making of an Advance nor the use of the proceeds thereof nor the performance by each of the Borrowers or the Guarantor of its obligations under any of the Finance Documents to which it is a party violates CISADA or comparable United Nations or European Union legislation.

10.22 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrowers of an Advance, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which the Borrowers are a party, the Borrowers confirm that:

(a)	they are acting for their own account;
(b)	they will use the proceeds of an Advance for their own benefit, under their full responsibility and exclusively for the purposes specified in this Agreement; and
(c)	the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act, or comparable United Nations or European Union legislation.

10.23 Ships. As of the Delivery Date in respect of each Ship, such Ship will be:

(a)	in the sole and absolute ownership of a Borrower and duly registered in such Borrower’s name under the law of an Approved Flag, unencumbered save and except for the Mortgage thereon in favor of the Security Trustee recorded against it and as permitted thereby;
(b)	seaworthy for hull and machinery insurance warranty purposes and in every way fit for its intended service; and
(c)	insured in accordance with the provisions of this Agreement and the requirements hereof in respect of such Insurances will have been complied with.

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10.24 Place of Business. For purposes of the UCC, each Security Party has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:

9, Boulevard Charles III

Monaco 98000

None of the Security Parties has a place of business in the United States of America, the District of Columbia, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America, other than its representative office at:

150 East 58th Street

New York, New York 10155

10.25 Solvency. In the case of each of the Borrowers and the Guarantor:

(a)	the sum of its assets, at a fair valuation, does and will exceed its liabilities, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities;
(b)	the present fair market saleable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities, as they mature;
(c)	it does not and will not have unreasonably small working capital with which to continue its business; and
(d)	it has not incurred, does not intend to incur and does not believe it will incur, debts beyond its ability to pay such debts as they mature.

10.26	Borrowers’ business; Guarantor’s business. From the date of its incorporation until the date hereof, neither the Borrowers nor the Guarantor have conducted any business other than in connection with, or for the purpose of, owning, managing, chartering and/or operating the Ships.
10.27	Immunity; Enforcement; Submission to Jurisdiction; Choice of Law.

(a)	Each Security Party is subject to civil and commercial law with respect to its obligations under the Finance Documents, and the execution, delivery and performance by each Security Party of the Finance Documents to which it is a party constitute private and commercial acts rather than public or governmental acts.
(b)	No Security Party or any of its properties has any immunity from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment, set-off, execution of a judgment or from any other legal process in relation to any Finance Document.

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(c)	It is not necessary under the laws of any Security Party’s jurisdiction of incorporation or formation, in order to enable any Creditor Party to enforce its rights under any Finance Document or by reason of the execution of any Finance Document or the performance by the any Security Party of its obligations under any Finance Document, that such Creditor Party should be licensed, qualified or otherwise entitled to carry on business in such Security Party’s jurisdiction of incorporation or formation.
(d)	None of the Creditor Parties will be deemed to be resident, domiciled or carrying on business in any Security Party’s jurisdiction of incorporation or formation by reason only of the execution, performance and/or enforcement of any Finance Document.
(e)	Under the law of each Security Party’s jurisdiction of incorporation or formation, the choice of the law of New York to govern this Agreement and the other Finance Documents to which New York law is applicable is valid and binding.
(f)	The submission by the Security Parties to the jurisdiction of the courts of the New York State courts and the U.S. Federal court sitting in New York County pursuant to Clause 32.2(a) is valid and binding and not subject to revocation, and service of process effected in the manner set forth in Clause 32.2(d) will be effective to confer personal jurisdiction over the Security Parties in such courts.

10.28	Status of Secured Liabilities. The Secured Liabilities constitute direct, unconditional and general obligations of each Security Party and rank (a) senior to all subordinated Financial Indebtedness and (b) not less than pari passu (as to priority of payment and as to security) with all other Financial Indebtedness of each Security Party.
11.	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS
11.1	Affirmative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full each of the Borrowers and the Guarantor, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.1 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed:

(a)	Performance of obligations. Each Security Party shall duly observe and perform its obligations under each Charter and each Finance Document to which it is or is to become a party.
(b)	Notification of defaults (etc). The Borrowers shall promptly notify the Agent, upon becoming aware of the same, of:

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(i)	the occurrence of an Event of Default or of any Potential Event of Default or any other event (including any litigation) which is reasonably likely to have a Material Adverse Effect;
(ii)	any default by any party to a Charter; and
(iii)	any damage or injury caused by or to the Ship in excess of $5,000,000.

(c) Confirmation of no default. The Borrowers will, within two (2) Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of each of the Borrowers and which states that:

(i)	no Event of Default has occurred and is continuing; or
(ii)	no Event of Default has occurred and is continuing, except for a specified event or matter, of which all material details are given.

	The Agent may serve requests under this Clause 11.1(c) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 33% of the Loan or (if no Advances have been made) Commitments exceeding 33% of the Total Commitments, and this Clause 11.1(c) does not affect the Borrowers’ obligations under Clause 11.1(b).
(d)	Notification of litigation. The Borrowers will provide the Agent with details of any legal or administrative action involving any of the Borrowers, any other Security Party, any Approved Manager or any Ship, the Earnings or the Insurances as soon as any of the Security Parties becomes aware that such action is instituted, unless it is likely that the legal or administrative action cannot be considered material in the context of any Finance Document.
(e)	Provision of further information. The Borrowers will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(i)	the Borrowers or the Guarantor or any of their respective subsidiaries; or
(ii)	any other matter relevant to, or to any provision of, a Finance Document, which may be requested by the Agent.

(f) Books of record and account. Each of the Borrowers and the Guarantor shall keep proper books of record and account, in which full and materially correct entries shall be made of all financial transactions and the assets and business of each of the Borrowers and the Guarantor in accordance with IFRS, and the Agent shall have the right to examine the books and records of each of the Borrowers and the Guarantor wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done without undue interference with the day to day business of the Borrowers or the Guarantor, as the case may be.

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(g) Financial reports.

(i)	The Borrowers shall prepare and deliver to the Agent:  as soon as practicable, but not later than 180 days after the end of each Fiscal Year to which they relate, financial statements in respect of such Fiscal Year, all in reasonable detail and prepared in accordance with IFRS;
(ii)	The Guarantor shall furnish to the Agent:

(A)	within 90 days after the end of each of the first three fiscal quarters in each Fiscal Year, quarterly reports on Form 6-K (or any successor form) containing unaudited financial statements (including a balance sheet and statement of income, changes in stockholders’ equity and cash flow) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding Fiscal Year) together with a Compliance Certificate;
(B)	within 180 days after the end of each Fiscal Year, an annual report on Form 20-F (or any successor form) containing the audited financial and other information required to be contained therein for such Fiscal Year together with a Compliance Certificate;
(C)	at or prior to such times as would be required to be filed or furnished to the SEC all such other reports and information that the Guarantor is required to file or furnish to the SEC under Sections 13(a) or 15(d) of the Exchange Act; and
(D)	such other financial statements (including without limitation details of all off-balance sheet and time charter hire commitments), annual budgets and projections as may be reasonably requested by the Agent, each to be in such form as the Agent may reasonably request,

provided that to the extent that the Guarantor ceases to qualify as a “foreign private issuer” within the meaning of the Exchange Act, the Guarantor will furnish to the Agent all reports and other information that it would be required to file with (or furnish to) the Commission pursuant Sections 13(a) or 15(d) of the Exchange Act if it were required to file such documents under the Exchange Act as follows:

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(1)	if the Guarantor is then subject to Sections 13(a) or 15(d) of the Exchange Act, within 30 days of the respective dates on which the Guarantor is required to file such documents pursuant to the Exchange Act; or
(2)	if the Guarantor is not then subject to Sections 13(a) or 15(d) under the Exchange Act, the applicable time periods described above with respect to quarterly, annual and other reports and information.
	Notwithstanding the foregoing, the Guarantor will be deemed to have furnished to the Agent such reports and information referred to above if the Guarantor has filed such reports and information with the Commission via the EDGAR system (or any successor system) and such reports and information are publicly available.

(h) Appraisals of Fair Market Value. The Borrowers shall procure and deliver to the Agent two written appraisal reports or one written appraisal report (as the case may be) setting forth the Fair Market Value of each Ship as follows:

(i)	at the Borrowers’ expense, for inclusion with each Compliance Certificate required to be delivered together with the second quarterly and annual financial statements that the Guarantor delivers under Clause 11.1(g)(ii)(B); and
(ii)	at the Lenders’ expense, at all other times upon the request of the Agent or the Majority Lenders, unless an Event of Default has occurred and is continuing, in which case the Borrowers shall procure it at their expense as often as requested.

	provided that if there is a difference of or in excess of 10% between the two valuations obtained by the Borrowers, the Borrowers may, at their sole expense, obtain a third appraisal from an Approved Broker.
(i)	Taxes. Each Security Party shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a Security Interest upon the Collateral or any part thereof, except in each case, for any such taxes (i) as are being contested in good faith by appropriate proceedings or (ii) the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of any of the Borrowers or any other Security Party or to affect the legality, validity, binding effect or enforceability of the Finance Documents.
(j)	Consents. Each Security Party shall obtain or cause to be obtained, maintain in full force and effect and comply with the conditions and restrictions (if any) imposed in connection with, every consent and do all other acts and things which may from time to time be necessary or required for the continued due performance of all of its obligations under any Charter and each Finance Document to which it is or is to become a party, and shall deliver a copy of all such consents to the Agent promptly upon its request.

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(k)	Compliance with applicable law. Each Security Party shall comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation, all Environmental Laws and regulations relating thereto, the failure to comply with which would be likely to have a material adverse effect on the financial condition of such Security Party or affect the legality, validity, binding effect or enforceability of any Charter and each Finance Document to which it is or is to become a party.
(l)	Existence. Each Security Party shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence in good standing under the laws of its jurisdiction of incorporation or formation.
(m)	Borrowers’ business. Each of the Borrowers shall conduct business only in connection with, or for the purpose of, owning, chartering and operating the Ship to be owned by it.
(n)	Properties. Except to the extent the failure to do so could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of a Security Party or affect the legality, validity, binding effect or enforceability of the Finance Documents, each Security Party shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
(o)	Loan proceeds. The Borrowers shall use the proceeds of each Advance solely to partially finance the payment of the Contract Price for a Ship.
(p)	Change of place of business. Each Security Party shall notify promptly the Agent of any change in the location of the place of business where it or any other Security Party conducts its affairs and keeps its records.
(q)	Pollution liability. Each Security Party shall take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of pollution incidents or as may be reasonably required to protect the interests of the Creditor Parties with respect thereto.
(r)	Subordination of loans. Each Security Party shall cause all loans made to it by any Affiliate, parent or subsidiary and all sums and other obligations (financial or otherwise) owed by it to any Affiliate, parent or subsidiary to be fully subordinated to all Secured Liabilities.
(s)	OFAC; Money laundering; CISADA. Each Security Party shall to the best of its knowledge and ability:

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(i)	ensure that no person who owns a controlling interest in or otherwise controls the Borrowers or any parent or subsidiary thereof is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by OFAC or included in any Executive Orders;
(ii)	comply, and cause each of their subsidiaries to comply, with any applicable law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act, or comparable United Nations or European Union legislation; and
(iii)	not use or permit the use of the proceeds of any Advance to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto or CISADA or comparable United Nations or European Union legislation.

(t) ERISA. Promptly upon:

(i)	the occurrence of any ERISA Termination Event; or
(ii)	the occurrence or existence of any ERISA Funding Event;

	the Guarantor shall furnish or cause to be furnished to the Agent written notice thereof and the action, if any, which the Guarantor has taken and proposes to take with respect thereto.
(u)	Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of any Security Party under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.
(v)	Shareholder and creditor notices. Each of the Borrowers and the Guarantor will send the Agent, at the same time as they are dispatched, copies of all communications which are dispatched to their (i) shareholders or any class of them or (ii) their creditors generally.
(w)	Maintenance of Security Interests. Each of the Borrowers and the Guarantor will:

(i) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

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(ii) without limiting the generality of paragraph (i), at its own cost, promptly register, file, record or enroll any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

(x) “Know your customer” checks. If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of any Security Party after the date of this Agreement; or
(iii)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
	obliges the Agent or any Lender (or, in the case of paragraph (iii), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers and the Guarantor shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (iii), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(y) Copies of Charters; Charter Assignment. Provided that all approvals necessary under Clause 14.13 have been previously obtained, the Borrowers shall:

(i) furnish promptly to the Agent a true and complete copy of any Charter for any Ship and a true and complete copy of each material amendment thereof; and

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(ii) in respect of any such Charter, execute and deliver to the Agent a Charter Assignment and use reasonable commercial efforts to cause the charterer to execute and deliver to the Security Trustee a consent and acknowledgement to such Charter Assignment in the form required thereby.

(z) Further assurances. From time to time, at its expense, each of the Borrowers and the Guarantor shall duly execute and deliver to the Agent such further documents and assurances as the Agent may request to effectuate the purposes of this Agreement, the other Finance Documents or obtain the full benefit of any of the Collateral.

11.2 Negative covenants. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers and the Guarantor, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.2 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed:

(a)	Security Interests. Each Borrower will not create, assume or permit to exist any Security Interest whatsoever upon any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Security Interests and the Guarantor will not create, assume or permit to exist any Security Interest on the shares of each of the Borrowers, other than those in favor of the Security Trustee.
(b)	Sale of assets; merger. Each Security Party shall not sell, transfer or lease (other than in connection with a Charter) all or substantially all of its properties and assets, or enter into any transaction of merger or consolidation or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution), provided that any Borrower may sell its respective Ship pursuant to the terms and conditions of this Agreement.
(c)	Affiliate transactions. No Security Party will enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate, parent or subsidiary, other than on terms and conditions substantially as favorable to such person as would be obtainable by such person at the time in a comparable arm’s-length transaction with a person other than an Affiliate, parent or subsidiary.
(d)	Change of business. Each of the Borrowers will not change the nature of its business or commence any business other than in connection with, or for the purpose of, owning, managing, chartering and operating the Ship to be owned by it. The Guarantor will not change the nature of its business or commence any business other than in connection with, or for the purpose of, owning, managing, chartering and operating vessels.

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(e)	Change of Control; Negative pledge. Each of the Borrowers and the Guarantor will not permit any act, event or circumstance that would result in a Change of Control, and each of the Borrowers will not permit any pledge or assignment of its Equity Interests except in favor of the Security Trustee to secure the Secured Liabilities.
(f)	Increases in capital. None of the Borrowers will increase its capital by way of the issuance of any class or series of Equity Interests or create any new class of Equity Interests that is not subject to a Security Interest to secure the Secured Liabilities.
(g)	Financial Indebtedness. The Borrowers will not incur any Financial Indebtedness other than the Loan and the Swap Exposure.
(h)	Dividends. So long as an Event of Default has occurred and is continuing, or if an Event of Default would result therefrom, or if the Guarantor is not in compliance with any of Clauses 12.2 through and including 12.5, each of the Borrowers and the Guarantor shall not declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its Equity Interests (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans to equity holders or set aside any funds for any of the foregoing purposes.
(i)	No amendment to the Contracts or the Charters. The Borrowers will not agree to any material amendment or supplement to, or waive or fail to enforce, a Contract or a Charter, as the case may be, or any of its material provisions.
(j)	No employees; VAT group; Ordinary course of business.

(i)	The Borrowers shall not have any employees other than the master, the officers and the crew of the Ship.
(ii)	The Borrowers shall not be or become a member of any VAT (value added tax) group.
(iii)	The Borrowers shall not enter into any transaction or series of related transactions other than in the ordinary course of business.

(k)	Loans and investments. The Borrowers shall not make any loan or advance to, make any investment in, or enter into any working capital maintenance or similar agreement with respect to any person, whether by acquisition of Equity Interests or indebtedness, by loan, guarantee or otherwise.
(l)	Acquisition of capital assets. The Borrowers shall not acquire any capital assets (including any vessel other than a Ship) by purchase, charter or otherwise, provided that for the avoidance of doubt nothing in this Clause 11.2(l) shall prevent or be deemed to prevent capital improvements being made to a Ship.

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(m)	Changes to Fiscal Year and accounting policies. Each of the Borrowers and the Guarantor shall not change its Fiscal Year or make or permit any change in accounting policies affecting (i) the presentation of financial statements or (ii) reporting practices, except in either case in accordance with IFRS or pursuant to the requirements of applicable laws or regulations.
(n)	Jurisdiction of incorporation or formation; Amendment of constitutional documents. No Security Party shall change the jurisdiction of its incorporation or formation or materially amend its constitutional documents.
(o)	Sale of Ship. None of the Borrowers will consummate the sale of its Ship without paying or causing to be paid all amounts due and owing under this Agreement or in connection therewith and the other Finance Documents prior to or simultaneously with the consummation of such sale.
(p)	Change of location. No Security Party shall change the location of its chief executive office or the office where its corporate records are kept or open any new office for the conduct of its business on less than thirty (30) days prior written notice to the Agent.
(q)	Money laundering. Each of the Borrowers and the Guarantor shall not contravene any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council and comparable United States federal and state laws, including without limitation the Bank Secrecy Act and the PATRIOT Act.

12	FINANCIAL COVENANTS
12.1	General. From the Effective Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Guarantor undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 12 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed.
12.2	Maximum leverage. The Guarantor shall maintain a ratio of Net Debt to Consolidated Total Capitalization of not more than 0.60 to 1.00, to be tested on the last day of each fiscal quarter.
12.3	Minimum tangible net worth. The Guarantor shall maintain a Consolidated Tangible Net Worth of not less than $150,000,000 plus (a) 25% of the Guarantor’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after July 1, 2010 and (b) 50% of the value of the Equity Proceeds realized from any issuance of Equity Interest in the Guarantor occurring on or after July 2, 2010.

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12.4	Minimum interest coverage. The Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.00 to 1.00 for the quarter ending September 30, 2011 until and including the quarter ending December 31, 2012 and thereafter 2.50 to 1.00. Such ratio shall be calculated quarterly on a trailing four quarter basis.
12.5	Free liquidity. From and after the Effective Date, the Guarantor shall maintain Consolidated Liquidity of not less than $15,000,000 until the Guarantor owns directly or indirectly a fleet of 15 vessels. When the Guarantor owns directly or indirectly a fleet of 15 or more vessels, the Guarantor shall maintain Consolidated Liquidity of not less than $15,000,000 plus $750,000 per each vessel that the Guarantor owns directly or indirectly in excess of 15 vessels. For the avoidance of doubt, Consolidated Liquidity shall include all amounts held in the Earnings Account and the Retention Account or in any other accounts of the Guarantor or its subsidiaries with any of the Lenders.
13.	MARINE INSURANCE COVENANTS
13.1	General. From the first Drawdown Date of a Delivery Advance until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 13 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed.
13.2	Maintenance of obligatory insurances. Each of the Borrowers shall keep the Ship owned by it insured at its expense against:

(a)	fire and usual marine risks (including hull and machinery and excess risks);
(b)	war risks (including without limitation terrorism and piracy and war risk P&I and London blocking and trapping addendum);
(c)	protection and indemnity risks (including FD&D coverage for all periods that such Ship operates on a time charter);
(d)	any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the reasonable opinion of the Security Trustee be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to the Borrowers.

13.3 Terms of obligatory insurances. The relevant Borrower shall effect such insurances in respect of its Ship:

(a)	in Dollars;
(b)	in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:

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(i)	120% of the Tranche of the Loan applicable to such Ship; and
(ii)	the Fair Market Value of the Ship owned by it;

	provided that not less than 80% of the insured value established pursuant to (i) or (ii) above shall be on a hull and machinery basis.
(c)	in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;
(d)	in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;
(e)	on approved terms; and
(f)	through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations that are members of the International Group of P&I Clubs.

13.4 Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, each Borrower shall procure that the obligatory Insurances effected by it shall:

(a) subject always to paragraph (b), name such Borrower and Approved Manager as the only named assureds unless the interest of every other named assured is limited:

(i) in respect of any obligatory Insurances for hull and machinery and war risks;

(A)	to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)	to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

(ii)

in respect of any obligatory Insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

and, where requested in writing by the Security Trustee, every other named assured has undertaken in writing to the Security Trustee (in such form as it reasonably requires) that any deductible shall be apportioned between the relevant Borrower and every other named assured in proportion to the aggregate claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;

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(b)	whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lenders, and to the extent permitted by the terms of the Insurances without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments;
(c)	name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)	to the extent permitted by the terms of the Insurances, provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever save for the deduction of unpaid premiums or other amounts applicable to the relevant Borrowers and the Ships and not applicable to any other vessel or person;
(e)	provide that such obligatory insurances shall be primary without right of contribution from other Insurances which may be carried by the Security Trustee or any other Creditor Party; and
(f)	provide that the Security Trustee may make proof of loss if the relevant Borrower fails to do so.

13.5 Renewal of obligatory Insurances. The Borrowers shall:

(a) at least 14 days before the expiry of any obligatory Insurance:

(i)	notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the relevant Borrowers propose to renew that obligatory Insurance and of the proposed terms of renewal; and
(ii)	obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b)	at least 7 days before the expiry of any obligatory Insurance, renew that obligatory Insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and
(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

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13.6 Copies of policies; letters of undertaking. The Borrowers shall ensure that all approved brokers provide the Security Trustee with statements detailing the intended cover of all policies relating to the obligatory Insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

(a)	they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment in accordance with the Insurance Assignment;
(b)	they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;
(c)	they will advise the Security Trustee immediately of any material change to the terms of the obligatory Insurances or if they cease to act as brokers;
(d)	they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory Insurances, in the event of their not having received notice of renewal instructions from the relevant Security Party or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and
(e)	in each case to the extent permitted by the terms of the Insurances, they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by such Borrower under such obligatory Insurances any premiums or other amounts due to them or any other person in respect of any vessel other than the Ship, to which the claim refers, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts related to vessels other than the Ships or persons other than the Borrowers, and they will not cancel such obligatory Insurances by reason of non-payment of such premiums or other amounts related to vessels other than the Ships or persons other than the Borrowers, and will arrange for a separate policy to be issued in respect of the relevant Ship forthwith upon being so requested by the Security Trustee.

13.7 Copies of certificates of entry. The relevant Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:

(a)	a certified copy of the certificate of entry for the Ship;
(b)	a letter or letters of undertaking in such form as may be required by the Security Trustee;

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(c)

where required to be issued under the terms of insurance/indemnity provided by the protection and indemnity association, but only if and when so requested by the Agent, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by such Borrower in relation to that Ship in accordance with the requirements of such protection and indemnity association; and

(d)

a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

13.8	Deposit of original policies. The relevant Borrower shall ensure that all policies relating to obligatory Insurances are deposited with the approved brokers through which the Insurances are effected or renewed.
13.9	Payment of premiums. The relevant Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.
13.10	Guarantees. The relevant Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
13.11	Compliance with terms of insurances. The relevant Borrower shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory Insurance repayable in whole or in part; and, in particular:

(a)	the relevant Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory Insurances, and (without limiting the obligation contained in Clause 13.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;
(b)	the relevant Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory Insurances;
(c)	the relevant Borrower shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America’s Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
(d)	the relevant Borrower shall not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

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13.12	Alteration to terms of insurances. The relevant Borrower shall neither make nor agree to any alteration to the terms of any obligatory Insurance nor waive any right relating to any obligatory Insurance.
13.13	Settlement of claims. The relevant Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory Insurances.
13.14	Provision of copies of communications. The relevant Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications between such Security Party and:

(a)	the approved brokers;
(b)	the approved protection and indemnity and/or war risks associations; and
(c)	the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i)	such Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)	any credit arrangements made between such Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.15 Provision of information. In addition, the relevant Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

(a)

obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory Insurances effected or proposed to be effected; and/or

(b)

effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such Insurances; and the relevant Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

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13.16	Mortgagee’s interest, additional perils and political risk insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance, a mortgagee’s political risks insurance and a mortgagee’s interest marine insurance in such amounts (not to exceed 120% of the Loan), on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrowers shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.
13.17	Review of insurance requirements. The Security Trustee may and, on instruction of the Majority Lenders, shall review, at the expense of the Borrowers, the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent or the Majority Lenders significant and capable of affecting the relevant Borrower or a Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the relevant Borrower may be subject.)
13.18	Modification of insurance requirements. The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Security Trustee may or, on instruction of the Majority Lenders, shall reasonably consider appropriate in the circumstances and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers accordingly.
13.19	Compliance with instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the relevant Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.
14.	SHIP COVENANTS
14.1	General. From the first Delivery Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 14 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed.
14.2	Ship’s name and registration. Each Borrower shall:

(a) keep the Ship owned by it registered in its name under the law of an Approved Flag;

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(b)	not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperiled; and
(c)	not change the name or port of registry on which its Ship was registered when it became subject to a Mortgage.

14.3 Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

(a)	consistent with first-class ship ownership and management practice;
(b)	so as to maintain the highest class for such Ship with the Classification Society, free of any overdue recommendations and conditions affecting such Ship’s class; and
(c)	so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which such Ship is registered or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

14.4 Classification Society instructions. The relevant Borrower shall instruct the Classification Society referred to in Clause 14.3(b):

(a)	to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Classification Society in relation to its Ship;
(b)	to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and its Ship either (i) electronically (through the Classification Society directly or by way of indirect access via the Borrower’s account manager and designating the Security Trustee as a user or administrator of the system under its account) or (ii) in person at the offices of the Classification Society, and to take copies of them electronically or otherwise;
(c)	to notify the Security Trustee immediately in writing if the Classification Society:

(i)	receives notification from that Borrower or any other person that the Ship’s Classification Society is to be changed; or
(ii)	becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Borrower’s or that Ship’s membership of the Classification Society;

(d) following receipt of a written request from the Security Trustee:

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(i)	to confirm that that Borrower is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or
(ii)	if that Borrower is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society.

14.5	Modification. The relevant Borrower shall not make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on such Ship which would or is reasonably likely to materially reduce its value.
14.6	Removal of parts. The relevant Borrower shall not remove any material part owned by it from the Ship owned by it, or any item of equipment owned by it installed on, that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favor of any person other than the Security Trustee and becomes on installation on that Ship, the property of that Security Party and subject to the security constituted by the Mortgage, provided that the relevant Borrower may install and remove equipment owned by a third party if the equipment can be removed without damage to the Ship owned by it.
14.7	Surveys. The relevant Borrower shall submit the Ship owned by it, at its sole expense, regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, at such Borrower’s expense, with copies of all survey reports.
14.8	Inspection. The relevant Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose at the cost of such Borrower) to board the Ship owned by it up to once per year to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections provided, however, that the Security Trustee shall be entitled to inspect the Ship owned by such Borrower at any time following a Major Casualty (a “Post Casualty Inspection”) until the Ship is repaired and such Post Casualty Inspection shall not constitute an annual inspection as provided herein and provided, further, that the first Post Casualty Inspection for such Ship shall be at the cost of the relevant Borrower and any subsequent Post Casualty Inspections related to such Major Casualty conducted by the Security Trustee shall be at its cost. The Security Trustee shall use reasonable endeavors to ensure that the operation of such Ship is not adversely affected as a result of such inspections.
14.9	Prevention of and release from arrest. The relevant Borrower shall promptly discharge:

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(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;
(b)	all taxes, dues and other amounts charged in respect of such Ship, the Earnings or the Insurances; and
(c)	all other accounts payable whatsoever in respect of such Ship, the Earnings or the Insurances,
	and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, the relevant Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

14.10 Compliance with laws etc. The relevant Borrower shall:

(a)	comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of such Borrower;
(b)	not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and
(c)	in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit that Ship to enter or trade to any zone which is declared a war zone by that Ship’s war risks insurers unless the relevant Borrower has (at its expense) effected any special, additional or modified insurance cover which its war risks insurers may require.

14.11 Provision of information. The relevant Borrower shall promptly provide the Security Trustee with any information which it requests regarding:

(a)	the Ship owned by it, its employment, position and engagements;
(b)	the Earnings and payments and amounts due to such Ship’s master and crew;
(c)	any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of such Ship and any payments made in respect of such Ship;
(d)	any towages and salvages;
(e)	the relevant Borrower’s, the Approved Manager’s or the Ship’s compliance with the ISM Code and the ISPS Code; and

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(f) the latest technical reports on such Ship from the Approved Manager, and, upon the Security Trustee’s request, provide copies of any current charter and charter guarantee relating to the Ship, and copies of the Borrower’s or the Approved Manager’s Document of Compliance.

14.12 Notification of certain events. The relevant Borrower shall immediately notify the Security Trustee by fax or email, confirmed forthwith by letter, of:

(a)	any casualty which is or is likely to be or to become a Major Casualty;
(b)	any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)	any requirement or condition made by any insurer or Classification Society or by any competent authority which is not immediately complied with;
(d)	any arrest or detention of the Ship owned by it, any exercise or purported exercise of any Security Interest on that Ship or the Earnings or any requisition of the Ship for hire;
(e)	any intended dry docking of the Ship owned by it;
(f)	any Environmental Claim made against the relevant Borrower or in connection with the Ship owned by it, or any Environmental Incident;
(g)	any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, the Approved Manager or otherwise in connection with the Ship; or
(h)	any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;
	and the relevant Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

14.13 Restrictions on chartering, appointment of managers etc. The relevant Borrower shall not unless consented to by the Agent (such consent not to be unreasonably withheld, conditioned or delayed):

(a)	let the Ship owned by it on demise charter for any period;
(b)	enter into any charter in relation to such Ship under which more than two (2) months’ hire (or the equivalent) is payable in advance;
(c)	charter such Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

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(d)	appoint a manager of such Ship other than the Approved Manager or agree to any material alteration to the material terms of the Approved Management Agreement, provided, however, that any manager so appointed including an Approved Manager appointed after the Effective Date shall enter into a manager’s undertaking in favor of the Security Trustee in form and substance acceptable to the Agent;
(e)	de-activate or lay up the Ship owned by it;
(f)	change the Classification Society; or
(g)	put the Ship owned by it in to the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any Security Interest on that Ship or the Earnings for the cost of such work or for any other reason.

14.14

Notice of Mortgage. The relevant Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first preferred mortgage, carry on board the Ship owned by it a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by such Borrower to the Security Trustee.

14.15

ISPS Code. The relevant Borrower shall comply with the ISPS Code and in particular, without limitation, shall:

(a)	procure that the Ship owned by it and the company responsible for the Ship’s compliance with the ISPS Code comply with the ISPS Code; and
(b)	maintain for such Ship an ISSC; and
(c)	notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

15.	SECURITY MAINTENANCE COVER RATIO
15.1	General. From the first Drawdown Date of a Delivery Advance until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers undertakes with each Creditor Party to comply with the following provisions of this Clause 15 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed.
15.2	Security Maintenance Cover Ratio. If, at any time, the Agent notifies the Borrowers that the ratio of:

(a) the aggregate Fair Market Value of the Ships delivered to the Borrowers; plus

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(b) the net realizable value of any additional Collateral previously provided under this Clause 15,

to:

(c)	the Tranches of the Loan relating to such Ships; plus
(d)	the ratable amount of any Swap Exposure allocable to the Borrowers that own such Ships

(such ratio being the “Security Maintenance Cover Ratio”) is below the average of the SMC Threshold of all Tranches relating to delivered Ships, the Agent (acting upon the instruction of the Majority Lenders) shall have the right to require the Borrowers to comply with the requirements of Clause 15.3. For the purpose of this Clause 15.2, the “SMC Threshold” means for each Tranche relating to a delivered Ship either: (i) 140% of the outstanding principal balance of the relevant Tranche plus a pro rata amount of any Swap Exposure allocable to the Borrower that owns the Ship to which such Tranche relates in the case where such Ship is not subject to Acceptable Long Term Employment; or (ii) 120% of the outstanding principal balance of the relevant Tranche plus a pro rata amount of any Swap Exposure allocable to the Borrower that owns the Ship to which such Tranche relates in the case where such Ship is subject to Acceptable Long Term Employment.

15.3 Provision of additional security; prepayment. If the Agent serves a notice on the Borrowers under Clause 15.2, the Borrowers shall, within one month after the date on which the Agent’s notice is served, either:

(a)	provide, or ensure that a third party provides, additional Collateral which, in the reasonable  opinion of the Majority Lenders, is in form and substance acceptable to the Majority Lenders and has a net realizable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorization of the Majority Lenders, approve or require; or
(b)	prepay the relevant Tranche of the Loan in such amount as will eliminate the shortfall.

15.4	Value of additional vessel security. The net realizable value of any additional Collateral which is provided under Clause 15.3 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the definition of Fair Market Value.
15.5	Valuations binding. Any valuation under Clause 15.3 or 15.4 shall be binding and conclusive as regards the Borrowers and the Lenders, as shall be any valuation which the Agent makes of any additional security which does not consist of or include a Security Interest.
15.6	Provision of information. The Borrowers shall promptly provide the Agent and any Approved Broker or other expert acting under Clause 15.4 with any information which the Agent or the Approved Broker or other expert may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Agent (or the expert appointed by the Agent) consider prudent.

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15.7	Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 21.2, 21.3 and 22.3, the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or other expert instructed by the Agent under this Clause 15 and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause 15.
15.8	Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.3(b).
16.	GUARANTEE
16.1	Guarantee and indemnity. In order to induce the Lenders to make the Loan to the Borrowers and to induce the Swap Banks to enter into the Designated Transactions with the Borrowers, the Guarantor irrevocably and unconditionally:

(a)	guarantees, as a primary obligor and not as merely as a surety, to each Creditor Party, the punctual payment and performance by the Borrowers when due, whether at stated maturity, by acceleration or otherwise, of all Secured Liabilities of Borrowers, whether for principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Obligations”);
(b)	undertakes with each Creditor Party that whenever the Borrowers do not pay any Guaranteed Obligation when due, the Guarantor shall immediately on demand pay that Guaranteed Obligation as if it were the primary obligor; and
(c)	indemnifies each Creditor Party immediately on demand against any cost, loss or liability suffered or incurred by that Creditor Party (i) if any Guaranteed Obligation is or becomes unenforceable, invalid or illegal or (ii) by operation of law as a consequence of the transactions contemplated by the Finance Documents and the Master Agreements. The amount of the cost, loss or liability shall be equal to the amount which that Creditor Party would otherwise have been entitled to recover.

16.2 Continuing guarantee. This guarantee:

(a)	is a continuing guarantee;
(b)	is joint and several with any other guarantee given in respect of the Guaranteed Obligations and shall not in any way be prejudiced by any other guarantee or security now or subsequently held by any Creditor Party in respect of the Guaranteed Obligations;

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(c)	shall remain in full force and effect until the later of the termination of the Total Commitments and the payment and performance in full of the Guaranteed Obligations and all other amounts payable hereunder regardless of any intermediate payment or discharge in whole or in part; and
(d)	shall be binding upon the Guarantor, its successors and permitted assigns.

16.3 Performance of Guaranteed Obligations; obligations pari passu.

(a) The Guarantor agrees that the Guaranteed Obligations will be performed and paid strictly in accordance with the terms of the relevant Finance Document or the Master Agreements regardless of any law or regulation or order of any court:

(i)	affecting (A) any term of such Finance Document or Master Agreements or the rights of any of the Creditor Parties with respect thereto or (B) the Borrower’s ability or obligation to make or render, or right of any Creditor Party to receive, any payments or performance due thereunder; or
(ii)	which might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrowers.

(b) The obligations of the Guarantor under this guarantee shall rank pari passu with all other unsecured obligations of such Guarantor.

16.4 Reinstatement. If any payment of any of the Guaranteed Obligations is rescinded, discharged, avoided or reduced or must otherwise be returned by a Creditor Party or any other person upon the insolvency, bankruptcy or reorganization of any of the Borrowers or any other Security Party or otherwise:

(a)	this guarantee shall continue to be effective or be reinstated, and the liability of each Guarantor hereunder shall continue or be reinstated, as the case may be, as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Creditor Party shall be entitled to recover the value or amount of that payment from the Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

16.5 Liability absolute and unconditional. The obligations of the Guarantor under this Clause 16 shall be irrevocable, absolute and unconditional and shall not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 16, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a)	any time, waiver or consent granted to, or composition with, any Security Party or other person;
(b)	the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;

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(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;
(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure or status of a Security Party or any other person (including without limitation any change in the holding of such Security Party’s or other person’s Equity Interests);
(e)	any amendment to or replacement of a Finance Document, a Master Agreement or any other document or security;
(f)	any unenforceability, illegality or invalidity of any obligation of any Security Party or any other person under any Finance Document, any Master Agreement or any other document or security;
(g)	any bankruptcy, insolvency or similar proceedings; or
(h)	any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Security Party.

16.6	Waiver of promptness, etc. The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security Interest or any property subject thereto or exhaust any right or take any action against any Security Party or any other person or entity or any Collateral.
16.7	Waiver of revocation, etc. The Guarantor hereby unconditionally and irrevocably waives any right to revoke this guarantee.
16.8	Waiver of certain defenses. The Guarantor hereby unconditionally and irrevocably waives:

(a)

any defense arising by reason of any claim or defense based upon an election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Guarantor or other rights of the Guarantor to proceed against the Borrowers, any of the other Security Parties, any other guarantor or any other person or entity or any Collateral; and

(b)

any defense based on any right of set-off or counterclaim against or in respect of the obligations of the Guarantor hereunder.

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16.9	Waiver of disclosure, etc. The Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Creditor Party to disclose to the Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrowers, any other Security Party or any of their respective subsidiaries now or hereafter known by any Creditor Party.
16.10	Immediate recourse. The Guarantor waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Guarantor under this Clause 16. This waiver applies irrespective of any law or any provision of a Finance Document or Master Agreement to the contrary.
16.11	Acknowledgment of benefits. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and the Master Agreements and that the waivers set forth in this Clause 16 are knowingly made in contemplation of such benefits.
16.12	Independent obligations. The obligations of the Guarantor under or in respect of this guarantee are independent of the Guaranteed Obligations or any other obligations of the Borrowers or any other Security Party under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this guarantee irrespective of whether any action is brought against the Borrowers or any other Security Party or whether the Borrowers or any other Security Party is joined in any such action or actions.
16.13	Deferral of Guarantor’s rights. Until the Guaranteed Obligations have been irrevocably paid and performed in full and unless the Agent otherwise directs, the Guarantor will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

(a)	to be indemnified by another Security Party;
(b)	to claim any contribution from any other guarantor of any Security Party’s obligations under the Finance Documents; and/or
(c)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents, the Master Agreements or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents or the Master Agreements by any Creditor Party.

16.14 Limitation of liability. The Guarantor and each of the Creditor Parties hereby confirms that it is its intention that the Guaranteed Obligations not constitute a fraudulent transfer or conveyance for purposes of the United States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, the Guarantor and each of the Creditor Parties hereby irrevocably agrees that the Guaranteed Obligations guaranteed by the Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of the Guarantor that are relevant under such laws, result in the Guaranteed Obligations of the Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.

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16.15	Reliance of Creditor Parties. Each of the Creditor Parties has entered into this Agreement in reliance upon, among other things, this guarantee.
16A.	BORROWERS’ SWAP GUARANTEE
16A.1	Guarantee and indemnity. In order to induce the Lenders to make the Loan to the Borrowers and to induce the Swap Banks to enter into the Designated Transactions with the Borrowers, each of the Borrowers, jointly and severally, irrevocably and unconditionally:

(a)	guarantees, as a primary obligor and not as merely as a surety, to each Creditor Party, the punctual payment and performance by each of the other Borrowers when due, whether at stated maturity, by acceleration or otherwise, of all Secured Liabilities of such Borrower under the Master Agreements to which it is a party, whether for principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Swap Obligations”);
(b)	undertakes with each Creditor Party that whenever a Borrower does not pay any Guaranteed Swap Obligation when due, each of the other Borrowers shall immediately on demand pay that Guaranteed Swap Obligation as if it were the primary obligor; and
(c)	indemnifies each Creditor Party immediately on demand against any cost, loss or liability suffered or incurred by that Creditor Party (i) if any Guaranteed Swap Obligation is or becomes unenforceable, invalid or illegal or (ii) by operation of law as a consequence of the transactions contemplated by the Finance Documents and the Master Agreements. The amount of the cost, loss or liability shall be equal to the amount which that Creditor Party would otherwise have been entitled to recover.

16A.2 Continuing guarantee. This guarantee:

(a)	is a continuing guarantee;
(b)	is joint and several with any other guarantee given in respect of the Guaranteed Swap Obligations and shall not in any way be prejudiced by any other guarantee or security now or subsequently held by any Creditor Party in respect of the Guaranteed Swap Obligations;
(c)	shall remain in full force and effect until the later of the termination of the Total Commitments and the payment and performance in full of the Guaranteed Swap Obligations and all other amounts payable hereunder regardless of any intermediate payment or discharge in whole or in part; and
(d)	shall be binding upon each of the Borrowers, its successors and permitted assigns.

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16A.3 Performance of Guaranteed Swap Obligations; obligations pari passu.

(a) Each of the Borrowers agrees that the Guaranteed Swap Obligations will be performed and paid strictly in accordance with the terms of the relevant Finance Document or the Master Agreements regardless of any law or regulation or order of any court:

(i)	affecting (A) any term of such Finance Document or Master Agreements or the rights of any of the Creditor Parties with respect thereto or (B) the relevant Borrower’s ability or obligation to make or render, or right of any Creditor Party to receive, any payments or performance due thereunder; or
(ii)	which might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrowers.

(b) The obligations of the Borrowers under this guarantee shall rank pari passu with all other secured obligations of the Borrowers under the Finance Documents.

16A.4 Reinstatement. If any payment of any of the Guaranteed Swap Obligations is rescinded, discharged, avoided or reduced or must otherwise be returned by a Creditor Party or any other person upon the insolvency, bankruptcy or reorganization of any of the Borrowers or any other Security Party or otherwise:

(a)	this guarantee shall continue to be effective or be reinstated, and the liability of each Borrower hereunder shall continue or be reinstated, as the case may be, as if the payment, discharge, avoidance or reduction had not occurred; and
(b)	each Creditor Party shall be entitled to recover the value or amount of that payment from the Borrowers, as if the payment, discharge, avoidance or reduction had not occurred.

16A.5 Liability absolute and unconditional. The obligations of each of the Borrowers under this Clause 16A shall be irrevocable, absolute and unconditional and shall not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 16A, and each of the Borrowers hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a)	any time, waiver or consent granted to, or composition with, any Security Party or other person;
(b)	the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;
(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;

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(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure or status of a Security Party or any other person (including without limitation any change in the holding of such Security Party’s or other person’s Equity Interests);
(e)	any amendment to or replacement of a Finance Document, a Master Agreement or any other document or security;
(f)	any unenforceability, illegality or invalidity of any obligation of any Security Party or any other person under any Finance Document, any Master Agreement or any other document or security;
(g)	any bankruptcy, insolvency or similar proceedings; or
(h)	any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Security Party.

16A.6	Waiver of promptness, etc. The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Swap Obligations and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security Interest or any property subject thereto or exhaust any right or take any action against any Security Party or any other person or entity or any Collateral.
16A.7	Waiver of revocation, etc. Each of the Borrowers hereby unconditionally and irrevocably waives any right to revoke this guarantee.
16A.8	Waiver of certain defenses. Each of the Borrowers hereby unconditionally and irrevocably waives:

(a)

any defense arising by reason of any claim or defense based upon an election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of each of the Borrowers or other rights of each of the Borrowers to proceed against any other Borrower, any of the other Security Parties, any other guarantor or any other person or entity or any Collateral; and

(b)

any defense based on any right of set-off or counterclaim against or in respect of the obligations of each of the Borrowers hereunder.

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16A.9	Waiver of disclosure, etc. Each of the Borrowers hereby unconditionally and irrevocably waives any duty on the part of any Creditor Party to disclose to the such Borrower any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the other Borrowers, any other Security Party or any of their respective subsidiaries now or hereafter known by any Creditor Party.
16A.10	Immediate recourse. Each of the Borrowers waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from such Borrower under this Clause 16A. This waiver applies irrespective of any law or any provision of a Finance Document or Master Agreement to the contrary.
16A.11	Acknowledgment of benefits. Each of the Borrowers acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and the Master Agreements and that the waivers set forth in this Clause 16A are knowingly made in contemplation of such benefits.
16A.12	Independent obligations. The obligations of each of the Borrowers under or in respect of this guarantee are independent of the Guaranteed Swap Obligations or any other obligations of the Borrowers or any other Security Party under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Borrower to enforce this guarantee irrespective of whether any action is brought against any of the other Borrowers or any other Security Party or whether any other Borrower or any other Security Party is joined in any such action or actions.
16A.13	Deferral of Borrower’s rights. Until the Guaranteed Swap Obligations have been irrevocably paid and performed in full and unless the Agent otherwise directs, each of the Borrowers will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or the Master Agreements:

(a)	to be indemnified by another Security Party;
(b)	to claim any contribution from any other guarantor of any Security Party’s obligations under the Finance Documents or the Master Agreements; and/or
(c)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents, the Master Agreements or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents or the Master Agreements by any Creditor Party.

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16A.14	Limitation of liability. Each of the Borrowers and each of the Creditor Parties hereby confirms that it is its intention that the Guaranteed Swap Obligations not constitute a fraudulent transfer or conveyance for purposes of the United States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, each of the Borrowers and each of the Creditor Parties hereby irrevocably agrees that the Guaranteed Swap Obligations guaranteed by each of the Borrowers shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of the relevant Borrower that are relevant under such laws, result in the Guaranteed Swap Obligations of such Borrower in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
16A.15	Reliance of Creditor Parties. Each of the Creditor Parties has entered into this Agreement in reliance upon, among other things, this guarantee.
17.	PAYMENTS AND CALCULATIONS
17.2	Currency and method of payments. All payments to be made by the Lenders or by the Security Parties under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(a)	by not later than 11:00 a.m. (New York City time) on the due date;
(b)	in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);
(c)	in the case of an amount payable by a Lender to the Agent or by another Security Party to the Agent or any Lender, to the account of the Agent as the Agent may from time to time notify to the Borrowers, the other Security Parties and the other Creditor Parties; and
(d)	in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties.

17.3 Payment on non-Business Day. If any payment by any Security Party under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a)	the due date shall be extended to the next succeeding Business Day; or
(b)	if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

	and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
17.4	Basis for calculation of periodic payments. All interest, commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
17.5	Distribution of payments to Creditor Parties. Subject to Clauses 17.5, 17.6 and 17.7

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(a)

any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, a Swap Counterparty or the Security Trustee shall be made available by the Agent to that Lender, that Swap Counterparty or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Counterparty or the Security Trustee may have notified to the Agent not less than five (5) Business Days previously; and

(b)

amounts to be applied in satisfying amounts of a particular category which are due to the Lenders and/or Swap Counterparty generally shall be distributed by the Agent to each Lender and each Swap Counterparty pro rata to the amount in that category which is due to it.

17.6	Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or a Swap Counterparty, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Counterparty under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Counterparty to pay on demand.
17.7	Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender or that Swap Counterparty until the Agent has satisfied itself that it has received that sum.
17.8	Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrowers or a Lender or a Swap Counterparty, without first having received that sum, the Borrowers or (as the case may be) the Lender or the Swap Counterparty concerned shall, on demand:

(a)	refund the sum in full to the Agent; and
(b)	pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sums available before receiving it.

17.9	Agent may assume receipt. Clause 17.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.
17.10	Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any other Security Party.

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17.11	Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any other Security Party.
17.12	Accounts prima facie evidence. If any accounts maintained under Clauses 17.9 and 17.10 show an amount to be owing by the Borrowers or any other Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.
18.	APPLICATION OF RECEIPTS
18.1	Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:

(i)	first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents and the Master Agreements other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers’ under Clauses 21, 22 and 23 of this Agreement or by the Borrowers or any other Security Party under any corresponding or similar provision in any other Finance Document or under any of the Master Agreements);
(ii)	second, in or towards satisfaction pro rata of (x) any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents and (y) any and all amounts of interest and default interest payable to each Swap Counterparty (and, for this purpose, the expression “interest” shall include any net amount which the Borrowers or any of them shall have become liable to pay or deliver under Section 9(h) of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 18); and
(iii)	third, in or towards satisfaction pro rata of (x) any and all amounts of principal payable to the Lenders under this Agreement and (y) in or toward satisfaction of the Swap Exposure of each Swap Counterparty (calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

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(b)

SECOND: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement but which the Agent, by notice to the Borrowers, the other Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 18.1(a); and

(c)

THIRD: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

18.2	Variation of order of application. The Agent may, with the authorization of the Majority Lenders and the Swap Counterparties, by notice to the Borrowers, the other Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 18.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.
18.3	Notice of variation of order of application. The Agent may give notices under Clause 18.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
18.4	Appropriation rights overridden. This Clause 18 and any notice which the Agent gives under Clause 18.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.
18.5	Payments in excess of Contribution.

(a) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, counterclaim or otherwise) in excess of its Contribution, such Lender shall forthwith purchase from the other Lenders such participation in their respective Contributions as shall be necessary to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.

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(b)	The Borrowers agrees that any Lender so purchasing a participation from another Lender pursuant to this Clause 18.5 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.
(c)	Notwithstanding paragraphs (a) and (b) of this Clause 18.5, any Lender which shall have commenced or joined (as a plaintiff) in an action or proceeding in any court to recover sums due to it under any Finance Document and pursuant to a judgment obtained therein or a settlement or compromise of that action or proceeding shall have received any amount, such Lender shall not be required to share any proportion of that amount with a Lender which has the legal right to, but does not, join such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in the same or another court.
(d)	Each Lender exercising or contemplating exercising any rights giving rise to a receipt or receiving any payment of the type referred to in this Clause 18.5 or instituting legal proceedings to recover sums owing to it under this Agreement shall, as soon as reasonably practicable thereafter, give notice thereof to the Agent who shall give notice to the other Lenders.

19.	APPLICATION OF EARNINGS, SALES PROCEEDS, INSURANCE PROCEEDS AND RETENTION ACCOUNT
19.1	General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrowers undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 19 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld, conditioned or delayed.
19.2	Payment of Earnings. The Borrowers undertakes with each Creditor Party to ensure that subject only to the provisions of any Charter Assignment or Earnings Assignment, all of the Earnings of each Ship are paid to the Earnings Account for such Ship.
19.3	Location of Accounts. The Borrowers shall promptly:

(a)	comply with any requirement of the Agent as to the location or re-location of the Earnings Accounts and the Retention Account; and
(b)	execute the Account Pledge with respect to each Earnings Account and the Retention Account and/or any other documents which the Agent specifies to create or maintain in favor of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) any of the Earnings Accounts and the Retention Account.

19.4 Borrowers’ obligations unaffected. The provisions of this Clause 19 do not affect:

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(a)	the liability of the Borrowers to make payments of principal and interest on the due dates; or
(b)	any other liability or obligation of the Borrowers or any other Security Party under any Finance Document.

19.5	Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Account Bank to the Borrowers and such interest shall be paid to the Retention Account and applied in accordance with Clause 19.7(b).
19.6	Debt for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Retention Account with prior notice to the Borrowers in order to discharge any amount due and payable under Clause 21 or Clause 22 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 21 or 22 .
19.7	Retention Account: credits and withdrawals

(a)	The Borrowers undertake with the Credit Parties that they will, from the Effective Date and for so long as any moneys are owing under the Finance Documents, on each Retention Date for a Tranche of the Loan pay to the Agent for credit to the Retention Account, the Retention Amount for the applicable Tranche of the Loan for such Retention Date less any amounts credited to the Retention Account pursuant to Section 19.5 provided however that, to the extent that there are moneys standing to the credit of the Earnings Account for the Ship which is the subject of such Tranche as at the relevant Retention Date, such moneys shall, up to an amount equal to the Retention Amount, be transferred to the Retention Account on that Retention Date.
(b)	Unless and until there shall occur an Event of Default (whereupon the provisions of Clause 20.4 shall apply), all Retention Amounts credited to the Retention Account together with interest from time to time accruing or at any time accrued on any amounts standing to the credit of the Retention Account from time to time, shall be applied by the Agent upon each Repayment Date and/or on each day that interest is payable pursuant to Clause 7, in or towards payment to the Lenders of (i) the relevant installment then falling due for repayment or, as the case may be, (ii) the relevant amount of interest then due.  Each such application by the Agent shall constitute a payment in or towards satisfaction of the Borrowers’ corresponding payment obligations under this Agreement but shall be strictly without prejudice to the obligations of the Borrowers to make any such payment to the extent that the aforesaid application by the Agent is insufficient to meet the same.
(c)	Unless the Agent otherwise agrees in writing, the Borrowers shall not be entitled to withdraw any moneys from the Retention Account at any time from the Effective Date and so long as any moneys are owing under the Finance Documents.

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19.8	Earnings Account Balance. On and after the Drawdown Date of the Delivery Advance for a Ship, the Borrower that is the owner of such Ship shall maintain in its Earnings Account a minimum balance of $200,000 at all times.
20.	EVENTS OF DEFAULT
20.1	Events of Default.  An Event of Default occurs if:

(a)	the Borrowers or any other Security Party fails to pay when due any principal or interest payable under a Finance Document or under any document relating to a Finance Document, unless its failure to pay is caused by a technical or administrative error (which is not caused by and is beyond the control of the Borrowers) and payment is made within two  (2) Business Days of its due date, or, in the case of all other amounts and sums payable on demand, within five (5) Business Days after the date when first demanded; or
(b)	any breach occurs of any of Clauses 8.9, 9.2(a), 11.2(b), 11.2(e), 11.2(o) or 11.2(p); or
(c)	any breach by a Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (e) of this Clause 20.1) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or
(d)	(subject to any applicable grace period specified in the Finance Document) any breach by a Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b), (c) or (e) of this Clause 20.1); or
(e)	any representation, warranty or statement made or repeated by, or by an officer or director of, a Borrower or any other Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or materially misleading when it is made or repeated; or
(f)	an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred on the part of a Security Party under any contract or agreement in excess of $5,000,000 (other than the Finance Documents and the Master Agreements) to which such Security Party, and such event of default has not been cured within any applicable grace period;
(g)	any Financial Indebtedness of a Security Party in excess of $5,000,000 is not paid when due (or if there is an applicable grace period within such applicable grace period) or, only in the case of sums payable on demand, when first demanded, except for any such Financial Indebtedness which is being contested by such Security Party in good faith and through appropriate proceedings and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of the Ship owned by such Security Party; or

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(h)

any Security Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or

(i)

any proceeding shall be instituted by or against any Security Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, and solely in the case of an involuntary proceeding:

(i)	such proceeding shall remain undismissed or unstayed for a period of 60 days; or
(ii)	any of the actions sought in such involuntary proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or

(j)	all or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, any Security Party are seized, nationalized, expropriated or compulsorily acquired by or under authority of any government; or
(k)	a creditor attaches or takes possession of, or a distress, execution, sequestration or process (each an “action”) is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues (the “assets”) of any Security Party in relation to a claim by such creditor which, in the reasonable opinion of the Majority Lenders, is likely to materially and adversely affect the ability of such Security Party to perform all or any of its material obligations under or otherwise to comply with the terms of any Finance Document to which it is a party and such Security Party does not procure that such action is lifted, released or expunged within 20 Business Days of such action being (i) instituted and (ii) notified to such Security Party; or
(l)	any Security Party ceases or suspends or threatens to cease or suspend the carrying on of its business, except in the case of a sale or a proposed sale of  a Ship by the Borrower that owns such Ship; or

(m)

a Ship becomes a Total Loss or suffers a Major Casualty and (i) in the case of a Total Loss, insurance proceeds are not collected or received by the Security Trustee from the underwriters or the Borrowers have not repaid the Tranche relating to the lost Ship within 180 days of the Total Loss Date or (ii) in the case of a Major Casualty, such Ship has not been otherwise repaired in a proper fashion; or

(n)

it becomes unlawful or impossible:

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(i)	for any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document;
(ii)	for the Agent, the Security Trustee, the Lenders or a Swap Bank to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(o)	any consent necessary to enable any of the Borrowers to own, operate or charter the Ship owned by it or to enable the Borrowers or any other Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or a Charter is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
(p)	any material provision of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest;
(q)	there occurs or develops a change in the financial position, state of affairs or prospects of a Security Party which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on such Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due;
(r)	an ERISA Funding Event or an ERISA Termination Event has occurred and is continuing which, in the reasonable opinion of the Majority Lenders, could reasonably be expected to result in a material adverse effect on the Security Parties’ business, assets or financial conditions or which may affect the legality, validity, binding effect and/or enforceability of any of the Finance Documents or the Master Agreements; or
(s)	an Event of Default as defined in Section 14 of a Master Agreement occurs.

20.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrowers a notice stating that the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are cancelled; and/or

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(ii)

serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand, provided that in the case of an Event of Default under either of Clauses 20.1(h) or (i), the Loan and all accrued interest and other amounts accrued or owing hereunder shall be deemed immediately due and payable without notice or demand therefor; and/or

(iii)

take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorization of the Majority Lenders, the Security Trustee shall, take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders and/or any Swap Counterparties are entitled to take under any Finance Document or any applicable law.

20.3	Termination of Commitments. On the service of a notice under Clause 20.2(a)(i), the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall be cancelled.
20.4	Acceleration of Loan. On the service of a notice under Clause 20.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers or any other Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand, and the Security Trustee shall forthwith be entitled to enforce the Security Interests created by this Agreement and any other Finance Document in any manner available to it and in such sequence as the Security Trustee may, in its absolute discretion, determine.
20.5	Multiple notices; action without notice. The Agent may serve notices under Clauses 20.2(a)(i) and (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 20.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.
20.6	Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, each Swap Counterparty, the Security Trustee and each Security Party a copy of the text of any notice which the Agent serves on the Borrowers under Clause 20.2 together with the text of any similar notice served on the Borrowers under any of the Master Agreements. Such notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defense.

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20.7	Creditor Party rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or a Swap Counterparty under a Finance Document, a Master Agreement or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.
20.8	Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to any Security Party:

(a)	for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
(b)	as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realized from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

	provided that nothing in this Clause 20.8 shall exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the willful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
20.9	POSITION OF SWAP COUNTERPARTIES. Neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 20, to have any regard to the requirements of a Swap Counterparty except to the extent such Swap Counterparty is also a Lender.
21.	FEES AND EXPENSES
21.1	Arrangement, commitment and up front fees. The Borrowers shall pay to the Agent:

(a)	for the account of the Arranger an upfront arrangement fee in such amount as set forth in the relevant Fee Letter within sixty (60) days after the Effective Date;
(b)	quarterly in arrears during the period from (and including) the Effective Date until the undrawn portion of the Total Commitments is permanently reduced to zero, for the account of the Lenders, a commitment fee at the rate of 1.10% per annum on the amount of the Total Commitments less the amount of the Loan, for distribution among the Lenders pro rata to their Commitments;
(c)	for the account of the Agent an annual agency fee in the amount of $5,000 per delivered Ship which shall be payable on the Delivery Date of such Ship and thereafter on each anniversary of the Effective Date occurring after the year in which such Delivery Date fell; and
(d)	for the account of the Lenders, a participation fee in such amount as set forth in the relevant Fee Letter which shall be paid within sixty (60) days after the Effective Date and shall be distributed pro rata to each Lender in proportion to which its Commitment bears to the Total Commitments.

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21.2

Costs of negotiation, preparation etc. The Borrowers shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, including, without limitation, the reasonable fees and disbursements of a Creditor Party’s legal counsel and any local counsel retained by them.

21.3

Costs of variations, amendments, enforcement etc. The Borrowers shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned, the amount of all expenses incurred by a Creditor Party in connection with:

(a)	any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;
(b)	any consent or waiver by the Lenders, the Swap Banks, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;
(c)	the valuation of any Collateral provided or offered under Clause 15 or any other matter relating to such Collateral; or
(d)	any step taken by the Security Trustee, a Lender or Swap Bank with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

	There shall be recoverable under paragraph (d) the full amount of all reasonable legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
21.4	Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers to pay such a tax.
21.5	Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
22.	INDEMNITIES
22.1	Indemnities regarding borrowing and repayment of Loan. The Borrowers shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

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(a)	the Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;
(b)	the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
(c)	any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7); or
(d)	the occurrence of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 20.

	It is understood that the indemnities provided in this Clause 22.1 shall not apply to any claim cost or expense which is a tax levied by a taxing authority on the indemnified party (which taxes are subject to indemnity solely as provided in Clause 23 below) but shall apply to any other costs associated with any tax which is not a Non-indemnified Tax.
22.2	Breakage costs. Without limiting its generality, Clause 22.1 covers any claim, expense, liability or loss incurred by a Lender:

(a)

in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

(b)

in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one, provided, however, that such claim, expense, liability or loss shall not include the actual Swap Exposure of either Swap Counterparty to that extent that such amount is covered by Clause 18.1(a)(iii).

22.3 Miscellaneous indemnities. The Borrowers shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with:

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(a)	any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; or
(b)	any other Pertinent Matter,
	other than claims, expenses, liabilities and losses which are shown to have been caused by the dishonesty or willful misconduct or gross negligence of the officers or employees of the Creditor Party concerned.
	Without prejudice to its generality, this Clause 22.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

22.4 Currency indemnity. If any sum due from the Borrowers or any other Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

(a)	making or lodging any claim or proof against the Borrowers or any other Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
(b)	obtaining an order or judgment from any court or other tribunal; or
(c)	enforcing any such order or judgment,
	the Borrowers shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.
	In this Clause 22.4, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
	This Clause 22.4 creates a separate liability of the Borrowers which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

22.5

Application to Master Agreements. For the avoidance of doubt, Clause 22.4 does not apply in respect of sums due from any of the Borrowers to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of Section 8 (Contractual Currency) of the Master Agreement shall apply.

22.6

Certification of amounts. A notice which is signed by an officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 22 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

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22.7	Sums deemed due to a Lender. For the purposes of this Clause 22, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
23.	NO SET-OFF OR TAX DEDUCTION; TAX INDEMNITY
23.1	No deductions. All amounts due from a Security Party under a Finance Document shall be paid:

(a)	without any form of set-off, cross-claim or condition; and
(b)	free and clear of any tax deduction except a tax deduction which such Security Party is required by law to make.

23.2 Grossing-up for taxes. If a Security Party is required by law to make a tax deduction from any payment:

(a)	such Security Party shall notify the Agent as soon as it becomes aware of the requirement;
(b)	such Security Party shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and
(c)	except if the deduction is for collection or payment of a Non-indemnified Tax of a Creditor Party, the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

23.3	Evidence of payment of taxes. Within one (1) month after making any tax deduction, the relevant Security Party shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
23.4	Indemnity for taxes. The Borrowers hereby indemnify and agree to hold each Creditor Party harmless from and against all taxes other than Non-indemnified Taxes levied on such Creditor Party (including, without limitation, taxes imposed on any amounts payable under this Clause 23.4) paid or payable by such person, whether or not such taxes or other taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which such Creditor Party makes written demand therefore specifying in reasonable detail the nature and amount of such taxes or other taxes.
23.5	Exclusion from indemnity and gross-up for taxes. The Borrowers shall not be required to indemnify any Creditor Party for a tax pursuant to Clause 23.4, or to pay any additional amounts to any Creditor Party pursuant to Clause 23.2, to the extent that the tax is collected by withholding on payments (a “Withholding”) and is levied by a Pertinent Jurisdiction of the payer and:

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(a)	the person claiming such indemnity or additional amounts was not an original party to this agreement and under applicable law (after taking into account relevant treaties and assuming that such person has provided all forms it may legally and truthfully provided) on the date such person became a party to this Agreement a Withholding would have been required on such payment provided that this exclusion shall not apply to the extent such Withholding does not exceed the Withholding that would have been applicable if such payment had been made to the person from whom such person acquired its rights under the Agreement and this exclusion shall not apply to the extent that such Withholding exceeds the amount of Withholding that would have been required under the law in effect on the date such person became a party to this Agreement; or
(b)	the person claiming such indemnity or additional amounts is a Lender who has changed its Lending Office and under applicable law (after taking into account relevant treaties and assuming that such Lender has provided all forms it may legally and truthfully provide) on the date such Lender changed its Lending Office Withholding would have been required on such payment provided that this exclusion shall not apply to the extent such Withholding does not exceed the Withholding that would have been applicable to such payment if such Lender had not changed its Lending Office and this exclusion shall not apply to the extent that the Withholding exceeds the amount of Withholding that would have been required under the law in effect immediately after such Lender changed its Lending Office; or
(c)	in the case of a Lender, to the extent that Withholding would not have been required on such payment if such Lender has complied with its obligations to deliver certain tax form pursuant to Section 23.6 below.

23.6 Delivery of tax forms.

(a)

Upon the reasonable request of the Borrowers, each Lender or transferee that is organized under the laws of a jurisdiction outside the United States (a “Non-U.S. Lender”) shall deliver to the Agent and the Borrowers two properly completed and duly executed copies of either U.S. Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY or, upon request of the Borrowers or the Agent, any subsequent versions thereof or successors thereto, in each case claiming such reduced rate (which may be zero) of U.S. Federal withholding tax with respect to payments of interest hereunder as such Non-U.S. Lender may properly claim.

(b)

In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall, when so requested by the Borrowers provide to the Agent and the Borrowers to in addition to the W-8BEN required under Section 23.6(a) a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrowers and is not a controlled foreign corporation related to the Borrowers (within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly notify the Agent in the event any representation in such certificate is no longer accurate.

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(c)	Each Non-U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from the Agent or Borrowers.
(d)	Notwithstanding any other provision of this Clause 23.6, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Clause 23.7 that such Non-U.S. Lender is not legally entitled to deliver.

23.7	Application to Master Agreements. For the avoidance of doubt, Clause 23 does not apply in respect of sums due from any of the Borrowers to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of Section 2(d) (Deduction or Withholding for Tax) of that Master Agreement shall apply.
24.	ILLEGALITY, ETC
24.1	Illegality. This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a)	unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)	contrary to, or inconsistent with, any regulation,
	for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

24.2	Notification of illegality. The Agent shall promptly notify the Borrowers, the other Security Parties, the Security Trustee and the other Lenders of the notice under Clause 24.1 which the Agent receives from the Notifying Lender.
24.3	Prepayment; termination of Commitment. On the Agent notifying the Borrowers under Clause 24.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 24.1 as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender’s Contribution with accrued interest, but without penalty, premium or breakage cost.
24.4	Mitigation. If circumstances arise which would result in a notification under Clause 24.1 then, without in any way limiting the rights of the Notifying Lender under Clause 24.3, the Notifying Lender shall use reasonable endeavors to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

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(a)	have an adverse effect on its business, operations or financial condition; or
(b)	involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or
(c)	involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

25.	INCREASED COSTS
25.1	Increased costs. This Clause 25 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

(a)

the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a Non-Indemnified tax); or

(a)

complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement, the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.

25.2 Meaning of “increased costs”. In this Clause 25, “increased costs” means, in relation to a Notifying Lender:

(a)	an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;
(b)	a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;
(c)	an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

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(d)

a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement;

(e)

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 22.1 or by Clause 23 or an item arising directly out of the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the date of this Agreement (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Creditor Party or any of its affiliates). For the purposes of this Clause 25.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

25.3	Notification to Borrowers of claim for increased costs. The Agent shall promptly notify the Borrowers and the other Security Parties of the notice which the Agent received from the Notifying Lender under Clause 25.1.
25.4	Payment of increased costs. The Borrowers shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
25.5	Notice of prepayment. If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 25.4, the Borrowers may give the Agent not less than 14 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.
25.6	Prepayment; termination of Commitment. A notice under Clause 25.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers’ notice of intended prepayment; and:

(a)	on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and
(b)	on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

25.7	Application of prepayment. Clause 8.8 shall apply in relation to the prepayment.
26.	SET-OFF
26.1	Application of credit balances. Upon the occurrence and during the continuance of an Event of Default, each Creditor Party may without prior notice:

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(a)	apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrowers or any of them at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrowers or any of them to that Creditor Party under any of the Finance Documents; and
(b)	for that purpose:

(i)	break, or alter the maturity of, all or any part of a deposit of the Borrowers or any of them;
(ii)	convert or translate all or any part of a deposit or other credit balance into Dollars; and
(iii)	enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

26.2	Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 26.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).
26.3	Sums deemed due to a Lender. For the purposes of this Clause 26, a sum payable by the Borrowers or any of them to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.
26.4	No Security Interest. This Clause 26 gives the Creditor Parties a contractual right of set-off only, and does not create any Security Interest over any credit balance of the Borrowers or any of them.
27.	TRANSFERS AND CHANGES IN LENDING OFFICES
27.1	Transfer by Borrowers or Guarantor. Neither the Borrowers nor the Guarantor may, without the consent of the Agent, given on the instructions of the Majority Lenders, transfer any of its rights, liabilities or obligations under any Finance Document.
27.2	Transfer by a Lender. Subject to Clause 27.4, a Lender (the “Transferor Lender”) may at any time, with the consent of the Borrowers (such consent not to be unreasonably withheld, conditioned or delayed), cause:

(a)	its rights in respect of all or part of its Contribution; or
(b)	its obligations in respect of all or part of its Commitment; or
(c)	a combination of (a) and (b),

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to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution or trust, fund or other entity reasonably acceptable to the Borrowers (each, a “Transferee Lender”) which (i) is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets or the securitization or similar transaction of that Transferor Lender’s Contribution or Commitment and (ii) is not an Affiliate of the Borrowers, by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

Notwithstanding the foregoing, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee shall be determined in accordance with Clause 31.

27.3 Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a)	sign the Transfer Certificate on behalf of itself, the Borrowers, the other Security Parties, the Security Trustee and each of the other Lenders;
(b)	on behalf of the Transferee Lender, send to the Borrowers and each other Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;
(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b),
	but the Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Transferor Lender and the Transferee Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations to the transfer to that Transferee Lender.

27.4	Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date, provided that it is signed by the Agent under Clause 27.3 on or before that date.
27.5	No transfer without Transfer Certificate. Except as provided in Clause 27.17, no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrowers, any other Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
27.6	Lender re-organization; waiver of Transfer Certificate. If a Lender enters into any merger, de-merger or other reorganization as a result of which all its rights or obligations vest in a successor, the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

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27.7 Effect of Transfer Certificate. The effect of a Transfer Certificate is as follows:

(a)	to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrowers or any other Security Party had against the Transferor Lender;
(b)	the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;
(c)	the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;
(d)	the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;
(e)	any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrowers or any other Security Party against the Transferor Lender had not existed;
(f)	the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and Clause 21, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and
(g)	in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.
	The rights and equities of the Borrowers or any other Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

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27.8	Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 27.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least three (3) Business Days’ prior notice.
27.9	Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.
27.10	Authorization of Agent to sign Transfer Certificates. The Borrowers, the Security Trustee and each Lender irrevocably authorizes the Agent to sign Transfer Certificates on its behalf.
27.11	Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $5,000 from the Transferor Lender or (at the Agent’s option) the Transferee Lender.
27.12	Sub-participation; subrogation assignment. A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents with notice to the Security Parties, the Agent and the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.
27.13	Disclosure of information.
27.14	Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a)	the date on which the Agent receives the notice; and
(b)	the date, if any, specified in the notice as the date on which the change will come into effect.

27.15

Notification. On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

27.16

Security over Lenders’ rights. In addition to the other rights provided to Lenders under this Clause 27, each Lender may without consulting with or obtaining consent from the Borrowers or any other Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

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(a)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and
(b)	in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;
except that no such charge, assignment or Security Interest shall:

(i)	release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or
(ii)	require any payments to be made by the Borrowers or any other Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

28.	VARIATIONS AND WAIVERS
28.1	Variations, waivers etc. by Majority Lenders. Subject to Clause 28.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
28.2	Variations, waivers etc. requiring agreement of all Lenders. As regards the following, Clause 28.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

(a)	a reduction in the Margin;
(b)	a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement or the Note;
(c)	an increase in any Lender’s Commitment;
(d)	a change to the definition of “Majority Lenders”;
(e)	a change to Clause 3 or this Clause 28;

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(f)	any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and
(g)	any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

28.3

Variations, waivers etc. relating to the Servicing Banks. An amendment or waiver that relates to the rights or obligations of the Agent or the Security Trustee under Clause 31 may not be effected without the consent of the Agent or the Security Trustee.

28.4

Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 28.1, 28.2 or 28.3, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a)	a provision of this Agreement or another Finance Document; or
(b)	an Event of Default; or
(c)	a breach by the Borrowers or another Security Party of an obligation under a Finance Document or the general law; or
(d)	any right or remedy conferred by any Finance Document or by the general law,
	and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

29.

NOTICES

29.1

General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, email or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly, provided, however, that if notice is provided by email, such notice shall also be given by confirming letter or fax to constitute effective notice hereunder unless receipt of such email notice is confirmed by return email and, provided, further, that notwithstanding anything in this Agreement to the contrary, all notices must be in writing.

29.2 Addresses for communications. A notice by letter or fax shall be sent:

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(a)	to the Borrowers
	or the Guarantor:	9, Boulevard Charles III
		Monaco 98000
		Attention: General Counsel
		Facsimile:+377 97 77 8346
		Email: legal@scorpiogroup.net
	with a copy to:	150 E. 58th Street
		New York, New York 10155
		Attention: Chief Financial Officer
		Facsimile: +212-542-1618
		Email: blee@scorpiogroup.net
(b)	to a Lender:	At the address below its name in
		Schedule 1 or (as the case may
		require) in the relevant Transfer
		Certificate.
(c)	to the Agent:	Credit Agricole Corporate And
		Investment Bank
		Middle Office Shipping
		Attention:  Marie-Claire VANDERPERRE
		9 quai du President Paul Doumer
		92920 Paris La Defense Cedex
		France
		Facsimile: +33 141 891 934
		Email: marieclaire.vanderperre@ca-cib.com

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	with a copy to:	Credit Agricole Corporate And Investment Bank
		Ship Finance Department
		Broadwalk House, 5 Appold Street
		London EC2A 2DA
		United Kingdom
(d)	to the Security Trustee:	Credit Agricole Corporate And Investment Bank
		Middle Office Shipping
		Attention:   Marie-Claire VANDERPERRE
		9 quai du President Paul Doumer
		92920 Paris La Defense Cedex
		France
		Facsimile: +33 141 891 934
		Email: marieclaire.vanderperre@ca-cib.com
	with a copy to:	Credit Agricole Corporate And Investment Bank
		Ship Finance Department
		Broadwalk House, 5 Appold Street
		London EC2A 2DA
		United Kingdom

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders and the Security Parties.

29.3 Effective date of notices. Subject to Clauses 29.4 and 29.5:

(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;
(b)	a notice which is sent by fax shall be deemed to be served, and shall take effect, two (2) hours after its transmission is completed; and.
(c)	a notice which is sent by electronic mail shall be deemed to be served and shall take effect at the time that (i) the confirming letter or fax is deemed to be served as provided in (a) or (b) above; or (ii) if receipt is confirmed by return email, the time of such return email.

29.4 Service outside business hours. However, if under Clause 29.3 a notice would be deemed to be served:

(a)	on a day which is not a business day in the place of receipt; or
(b)	on such a business day, but after 5:00 p.m. local time,
the notice shall (subject to Clause 29.5) be deemed to be served, and shall take effect, at 9:00 a.m. on the next day which is such a business day.

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29.5	Illegible notices. Clauses 29.3 and 29.4 do not apply if the recipient of a notice notifies the sender within one (1) hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
29.6	Valid notices. A notice (other than a notice sent solely by electronic mail without a confirming letter, fax or return email) under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a)	the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
(b)	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

29.7	English language. Any notice under or in connection with a Finance Document shall be in English.
29.8	Meaning of “notice”. In this Clause 29, “notice” includes any demand, consent, authorization, approval, instruction, waiver or other communication.
30.	SUPPLEMENTAL
30.1	Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a)	cumulative;
(b)	may be exercised as often as appears expedient; and
(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

30.2	Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
30.3	Counterparts. A Finance Document may be executed in any number of counterparts.
30.4	Binding Effect. This Agreement shall become effective on the Effective Date and thereafter shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

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31.	THE SERVICING BANKS AND PARALLEL DEBT
31.1	Appointment and Granting.

(a)	The Agent. Each of the Lenders and the Arranger appoints and authorizes (with a right of revocation) the Agent to act as its agent hereunder and under any of the other Finance Documents with such powers as are specifically delegated to the Agent by the terms of this Agreement and of any of the other Finance Documents, together with such other powers as are reasonably incidental thereto.
(b)	The Security Trustee.

(i)	Authorization of Security Trustee. Each of the Lenders, the Swap Banks, the Arranger and the Agent appoints and authorizes (with a right of revocation) the Security Trustee to act as security trustee hereunder and under the other Finance Documents (other than the Notes) with such powers as are specifically delegated to the Security Trustee by the
	terms of this Agreement and such other Finance Documents, together with such other powers as are reasonably incidental thereto.
(ii)	Granting Clause. To secure the payment of all sums of money from time to time (i) owing to the Lenders under the Finance Documents and (ii) to the Swap Banks under the Master Agreements in the maximum principal amount of 25% of the Total Commitments plus accrued interest thereon and the performance of the covenants of the Borrowers and any other Security Party herein and therein contained, and in consideration of the premises and of the covenants herein contained and of the extensions of credit by the Lenders, the Security Trustee does hereby declare that it will hold as such trustee in trust for the benefit of the Lenders, the Swap Banks, the Arranger and the Agent, from and after the execution and delivery thereof, all of its right, title and interest as mortgagee in, to and under the Mortgages and its right, title and interest as assignee and secured party under the other Finance Documents (the right, title and interest of the Security Trustee in and to the property, rights and privileges described above, from and after the execution and delivery thereof, and all property hereafter specifically subjected to the Security Interest of the indenture created hereby and by the Finance Documents by any amendment hereto or thereto are herein collectively called the “Estate”); TO HAVE AND TO HOLD the Estate unto the Security Trustee and its successors and assigns forever, BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the Lenders, the Swap Banks, the Arranger and the Agent and their respective successors and assigns without any priority of any one over any other, UPON THE CONDITION that, unless and until an Event of Default under this Agreement shall have occurred and be continuing, the Borrowers shall be permitted, to the exclusion of the Security Trustee, to possess and use the Ships. IT IS HEREBY COVENANTED, DECLARED AND AGREED that all property subject or to become subject hereto is to be held, subject to the further covenants, conditions, uses and trusts hereinafter set forth, and each Security Party, for itself and its respective successors and assigns, hereby covenants and agrees to and with the Security Trustee and its successors in said trust, for the equal and proportionate benefit and security of the Lenders, the Swap Banks, the Arranger and the Agent as hereinafter set forth.

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(iii) Acceptance of Trusts. The Security Trustee hereby accepts the trusts imposed upon it as Security Trustee by this Agreement, and the Security Trustee covenants and agrees to perform the same as herein expressed and agrees to receive and disburse all monies constituting part of the Estate in accordance with the terms hereof.

31.2 Scope of Duties. Neither the Agent nor the Security Trustee (which terms as used in this sentence and in Clause 31.5 hereof shall include reference to their respective affiliates and their own respective and their respective affiliates’ officers, directors, employees, agents and attorneys-in-fact):

(a)	shall have any duties or responsibilities except those expressly set forth in this Agreement and in any of the Finance Documents, and shall not by reason of this Agreement or any of the Finance Documents be (except, with respect to the Security Trustee, as specifically stated to the contrary in this Agreement) a trustee for a Lender or a Swap Bank;
(b)	shall be responsible to the Lenders or the Swap Banks for any recitals, statements, representations or warranties contained in this Agreement or in any of the Finance Documents, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any of the other Finance Documents, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any of the other Finance Documents or any other document referred to or provided for herein or therein or for any failure by a Security Party or any other person to perform any of its obligations hereunder or thereunder or for the location, condition or value of any property covered by any Security Interest under any of the Finance Documents or for the creation, perfection or priority of any such Security Interest;
(c)	shall be required to initiate or conduct any litigation or collection proceedings hereunder or under any of the Finance Documents unless expressly instructed to do so in writing by the Majority Lenders; or

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(d) shall be responsible for any action taken or omitted to be taken by it hereunder or under any of the Finance Documents or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. Each of the Security Trustee and the Agent may employ agents and attorneys-in-fact and neither the Security Trustee nor the Agent shall be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. Each of the Security Trustee and the Agent may deem and treat the payee of a Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent together with the written consent of the Borrowers to such assignment or transfer, provided, however, that if an Event of Default has occurred and is continuing, no consent of the Borrower shall be required for such assignment or transfer.

31.3

Reliance. Each of the Security Trustee and the Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telefacsimile, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper person or persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Security Trustee or the Agent, as the case may be. As to any matters not expressly provided for by this Agreement or any of the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions signed by the Majority Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.

31.4

Knowledge. Neither the Security Trustee nor the Agent shall be deemed to have knowledge or notice of the occurrence of a Potential Event of Default or Event of Default (other than, in the case of the Agent, the non-payment of principal of or interest on the Loan or actual knowledge thereof) unless each of the Security Trustee and the Agent has received notice from a Lender or the Borrowers specifying such Potential Event of Default or Event of Default and stating that such notice is a “Notice of Default”. If the Agent receives such a notice of the occurrence of such Potential Event of Default or Event of Default, the Agent shall give prompt notice thereof to the Security Trustee, the Swap Banks, and the Lenders (and shall give each Lender prompt notice of each such non-payment). Subject to Clause 31.8 hereof, the Security Trustee and the Agent shall take such action with respect to such Potential Event of Default or Event of Default or other event as shall be directed by the Majority Lenders, except that, unless and until the Security Trustee and the Agent shall have received such directions, each of the Security Trustee and the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Event of Default or Event of Default or other event as it shall deem advisable in the best interest of the Lenders and the Swap Banks.

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31.5	Security Trustee and Agent as Lenders. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee or Agent, as the case may be) in its individual capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Security Trustee or the Agent, as the case may be, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include each of the Security Trustee and the Agent in their respective individual capacities. Each of the Security Trustee and the Agent (and any successor acting as Security Trustee and Agent, as the case may be) and their respective affiliates may (without having to account therefor to a Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrowers and any of their subsidiaries or affiliates as if it were not acting as the Security Trustee or the Agent, as the case may be, and each of the Security Trustee and the Agent and their respective affiliates may accept fees and other consideration from the Borrowers for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.
31.6	Indemnification of Security Trustee and Agent. The Lenders severally agree, ratably in accordance with the aggregate principal amount of each Lender’s Contribution in the Loan, to indemnify each of the Agent and the Security Trustee (to the extent not reimbursed under other provisions of this Agreement, but without limiting the obligations of the Borrowers under said other provisions) for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Security Trustee or the Agent in any way relating to or arising out of this Agreement or any of the other Finance Documents or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby (including, without limitation, the costs and expenses which the Borrowers are to pay hereunder, but excluding, unless an Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of their respective agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, except that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.
31.7	Reliance on Security Trustee or Agent. Each Lender and each Swap Bank agrees that it has, independently and without reliance on the Security Trustee, the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrowers and decision to enter into this Agreement and that it will, independently and without reliance upon the Security Trustee, the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the Finance Documents. None of the Security Trustee or the Agent shall be required to keep itself informed as to the performance or observance by the Borrowers of this Agreement or any of the Finance Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Borrowers. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Security Trustee or the Agent hereunder, neither the Security Trustee nor the Agent shall have any duty or responsibility to provide a Lender with any credit or other information concerning the affairs, financial condition or business of the Borrowers or any of their parents, subsidiaries or affiliates which may come into the possession of the Security Trustee, the Agent or any of their respective affiliates.

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31.8	Actions by Security Trustee and Agent. Except for action expressly required of the Security Trustee or the Agent hereunder and under the other Finance Documents, each of the Security Trustee and the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Clause 31.6 against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.
31.9	Resignation and Removal. Subject to the appointment and acceptance of a successor Security Trustee or Agent (as the case may be) as provided below, each of the Security Trustee and the Agent may resign at any time by giving notice thereof to the Lenders, the Swap Bank, and the Borrowers, and the Security Trustee or the Agent may be removed at any time with or without cause by the Majority Lenders by giving notice thereof to the Agent, the Security Trustee, the Lenders and the Borrowers. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Security Trustee or Agent, as the case may be. If no successor Security Trustee or Agent, as the case may be, shall have been so appointed by the Lenders or, if appointed, shall not have accepted such appointment within 30 days after the retiring Security Trustee’s or Agent’s, as the case may be, giving of notice of resignation or the Majority Lenders’ removal of the retiring Security Trustee or Agent, as the case may be, then the retiring Security Trustee or Agent, as the case may be, may, on behalf of the Lenders and the Swap Banks, appoint a successor Security Trustee or Agent. Upon the acceptance of any appointment as Security Trustee or Agent hereunder by a successor Security Trustee or Agent, such successor Security Trustee or Agent, as the case may be, shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Security Trustee or Agent, as the case may be, and the retiring Security Trustee or Agent shall be discharged from its duties and obligations hereunder. After any retiring Security Trustee or Agent’s resignation or removal hereunder as Security Trustee or Agent, as the case may be, the provisions of this Clause 31 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Security Trustee or the Agent, as the case may be.
31.10	Release of Collateral. Without the prior written consent of the Majority Lenders, and the Swap Banks neither the Security Trustee nor the Agent will consent to any modification, supplement or waiver under any of the Finance Documents nor without the prior written consent of all of the Lenders and the Swap Banks release any Collateral or otherwise terminate any Security Interest under the Finance Documents, except that no such consent is required, and each of the Security Trustee and the Agent is authorized, to release any Security Interest covering property if the Secured Liabilities have been paid and performed in full or which is the subject of a disposition of property permitted hereunder or to which the Lenders and the Swap Banks have consented.
31.11	Parallel Debt

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(a)

Each Borrower hereby irrevocably and unconditionally undertakes, as far as necessary in advance, to pay to the Security Trustee, as creditor in its own right and not as representative of any of the other Creditor Parties, an amount equal to the aggregate of all its Principal Obligations to all the Creditor Parties from time to time due in accordance with the terms and conditions of such Principal Obligations (such payment undertaking and the obligations and liabilities which are the result thereof, its “Parallel Debt”).

(b)

Each of the parties hereto hereby acknowledges that (i) the Parallel Debt of any Borrower constitutes undertakings, obligations and liabilities of such Borrower to the Security Trustee which are separate and independent from, and without prejudice to, the Principal Obligations which such Borrower has to any other Creditor Party and (ii) that the Parallel Debt represents the Security Trustee’s own claim to receive payment of such Parallel Debt by such Borrower, provided that the total amount which may become due under the Parallel Debt of such Borrower under this Clause 31.11 shall never exceed the total amount which may become due under all the Principal Obligations of such Borrower to all the Creditor Parties.

(i)	The total amount due by the relevant Borrower as the Parallel Debt under Clause 31.11(a) shall be decreased to the extent that such Borrower shall have paid any amounts to the Creditor Parties or any of them to reduce such Borrower’s outstanding Principal Obligations or any Creditor Party otherwise receive any amount of such Principal Obligations (other than by virtue of Clause 31.11(c)(ii); and
(ii)	To the extent that any Borrower shall have paid any amounts to the Security Trustee under the Parallel Debt or the Security Trustee shall have otherwise received monies in payment of such Parallel Debt, the total amount due under the Principal Obligations shall be decreased by the same amount.

(c) In the event the Security Trustee should resign or be removed by the Majority Lenders, the Security Trustee shall assign the Parallel Debt owed to it to its successor security trustee together with all of its other rights and obligations under this Clause 31.11 and shall take all such further actions as the Agent in its sole discretion may deem necessary or desirable in order to assign and transfer to the successor security trustee the Parallel Debt and the other rights and obligations under this Clause 31.11.

32.	LAW AND JURISDICTION
32.1	Governing law. THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN A FINANCE DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

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32.2 Consent to Jurisdiction.

(a)	Each of the Security Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Finance Documents to which such Security Party is a party or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State Court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b)	Nothing in this Clause 32.2 shall affect the right of a Creditor Party to bring any action or proceeding against a Security Party or its property in the courts of any other jurisdictions where such action or proceeding may be heard.
(c)	Each of the Security Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and any immunity from jurisdiction of any court or from any legal process with respect to itself or its property.
(d)	Each of the Security Parties hereby agrees to appoint Seward & Kissel LLP, with offices currently located at One Battery Park Plaza, New York, New York 10004, Attention: Lawrence Rutkowski, as its designated agent for service of process for any action or proceeding arising out of or relating to this Agreement or any other Finance Document. Each of the Security Parties also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to its address specified in Clause 29.2. Each of the Security Parties also agrees that service of process may be made on it by any other method of service provided for under the applicable laws in effect in the State of New York.

32.3 Creditor Party rights unaffected. Nothing in this Clause 32 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

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32.4	Meaning of “proceedings”. In this Clause 32, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.
33.	WAIVER OF JURY TRIAL
33.1	WAIVER. EACH OF THE SECURITY PARTIES AND THE CREDITOR PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
34.	PATRIOT ACT NOTICE
34.1	PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrowers that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies each Security Party, which information includes the name and address of each Security Party and such other information that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the PATRIOT Act.

[SIGNATURE PAGES FOLLOW ON NEXT PAGES]

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EXECUTION PAGE

WHEREFORE, the parties hereto have caused this Loan Agreement to be executed as of the date first above written.

STI AMBER SHIPPING COMPANY LIMITED, as Borrower By: /s/ Brian M. Lee                         Name: Brian M. Lee Title: Director	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as Lender, Agent, Arranger, Security Trustee and Swap Bank By: /s/ Geoffrey D. Ferrer                          Name: Geoffrey D. Ferrer Title: Attorney in Fact
STI GARNET SHIPPING COMPANY LIMITED, as Borrower By: /s/ Brian M. Lee                         Name: Brian M. Lee Title: Director	SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), as Lender and Swap Bank By: /s/ Geoffrey D. Ferrer                         Name: Geoffrey D. Ferrer Title: Attorney in Fact
STI RUBY SHIPPING COMPANY LIMITED, as Borrower By: /s/ Brian M. Lee                         Name: Brian M. Lee Title: Director
STI TOPAZ SHIPPING COMPANY LIMITED, as Borrower By: /s/ Brian M. Lee                         Name: Brian M. Lee Title: Director
SCORPIO TANKERS INC., as Guarantor By: /s/ Brian M. Lee                         Name: Brian M. Lee Title: Chief Financial Officer

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EX-8.1

Exhibit 8.1

SUBSIDIARIES OF SCORPIO TANKERS INC.

Company		Incorporated in
Noemi Shipping Company Limited	The Republic of The Marshall Islands
Senatore Shipping Company Limited	The Republic of The Marshall Islands
Venice Shipping Company Limited	The Republic of The Marshall Islands
STI Harmony Shipping Company Limited	The Republic of The Marshall Islands
STI Heritage Shipping Company Limited	The Republic of The Marshall Islands
STI Conqueror Shipping Company Limited	The Republic of The Marshall Islands
STI Matador Shipping Company Limited	The Republic of The Marshall Islands
STI Gladiator Shipping Company Limited	The Republic of The Marshall Islands
STI Highlander Shipping Company Limited	The Republic of The Marshall Islands
STI Spirit Shipping Company Limited	The Republic of The Marshall Islands
STI Coral Shipping Company Limited	The Republic of The Marshall Islands
STI Diamond Shipping Company Limited	The Republic of The Marshall Islands
STI Amber Shipping Company Limited	The Republic of The Marshall Islands
STI Topaz Shipping Company Limited	The Republic of The Marshall Islands
STI Ruby Shipping Company Limited	The Republic of The Marshall Islands
STI Garnet Shipping Company Limited	The Republic of The Marshall Islands
STI Onyx Shipping Company Limited	The Republic of The Marshall Islands
STI Sapphire Shipping Company Limited	The Republic of The Marshall Islands
STI Emerald Shipping Company Limited	The Republic of The Marshall Islands
STI Chartering and Trading Limited	The Republic of The Marshall Islands
Sting LLC	State of Delaware, United States of America

EX-11.2

WHISTLEBLOWER POLICY

Scorpio Tankers Inc. (the “Corporation”) is committed to high standards of ethical, moral and legal business conduct. The Corporation values input from its employees and expects all its directors, officers, employees and subsidiaries to adhere to a high standard of personal and professional integrity and to avoid any conduct that might reflect unfavourably upon the Corporation personnel or upon the Corporation itself. In line with the Corporation’s commitment to open communication, the Audit Committee of the Board of Directors of the Corporation (the “Committee”) has adopted this whistleblower policy (the “Policy”) to provide an avenue for employees, directors, officers, contractors, subcontractors and agents (“Employees”) to raise concerns without fear of retaliation for reports made in good faith.

I. SCOPE

This Policy shall encompass:

• The receipt, retention, and treatment of complaints, whether or not in anonymous form, received by the “Corporation” regarding accounting, internal accounting controls, auditing matters (“Accounting Matters“); and

• The receipt, retention, and treatment of complaints, whether or not in anonymous form, received by the Corporation relating to vessel operational matters, especially environmental management (“Environmental Matters”).

Matters relating to Employee welfare shall not be covered by this Policy, although it is recognized that Employees often chose to submit complaints or concerns as ‘Compliance’ related.

Accounting Matters shall include but not be limited to, the following:

• Fraud or deliberate error or omission in the preparation, evaluation, review or audit of any of the Corporation’s financial statements;

• Fraud or deliberate error or omission in the recording and maintaining of the Corporation’s financial records;

• Deficiencies in or noncompliance with the Corporation’s internal accounting controls;

• Misrepresentation or a false statement to or by a senior officer or accountant regarding a matter contained in the Corporation’s financial records, financial statements or audit reports; and

• Deviation from full and fair reporting of the Corporation’s financial condition.

II. SUBMISSION OF COMPLAINTS

The Corporation will continue to encourage Employees in the first instance to address their concerns with their immediate supervisor or point of contact with the organization. As it pertains to seafarers, this would include the normal ‘chain of command’ including shore representatives such as the Technical or Marine Superintendent, the Designated Person Ashore, or the dedicated Environmental Manager. Management will also maintain an ‘open door policy’ to address individuals’ complaints for resolution internally whenever possible.

For cases where the individual feels he or she cannot submit concerns through ‘usual channels’ the Corporation has selected EthicsPoint to provide a means for individuals to submit concerns regarding both Accounting Matters and Environmental Matters. EthicsPoint provides the Corporation with a website and a telephone hotline:

• Website:  www.scorpiotankers.ethicspoint.com

• Telephone hotline:  #1-866-879-0839

III. TREATMENT OF COMPLAINTS

The general counsel of the Corporation (the “General Counsel”) shall be designated by the Committee as the point of contact for concerns submitted via EthicsPoint, and he shall report directly to the Committee relating to any submissions. Any further actions, investigation (whether internal or external) or resources such as outside counsel or other advisors shall be at the sole discretion of the Committee. When requested by the party submitting the complaint, confidentiality will be maintained to the fullest extent possible consistent with the need to conduct an adequate review.

The Corporation will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any Employee in the terms and conditions of employment based upon any lawful actions of the Employee with respect to good faith reporting of complaints regarding Accounting Matters or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002.

IV. REPORTING AND RECORD RETENTION

At each meeting of the Committee, the General Counsel shall review any complaints received since the previous meeting; reference to this review shall be included in the Minutes of the meeting. The General Counsel shall also be responsible for verifying and maintaining the EthicsPoint website and telephone hotline.

Specific Complaints may require the immediate attention of the Committee. If the General Counsel receives a complaint that he deems both credible and material in its allegations and reasonable consequences for the Corporation he shall contact the Chairman of the Audit Committee immediately.

V. AMENDMENTS

The Committee shall review the Policy annually and may amend it at any time, consistent with the requirements of applicable laws, rules and regulations.

2

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Emanuele Lauro, certify that:

1. I have reviewed this annual report on Form 20-F of Scorpio Tankers Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 23, 2012

/s/ Emanuele Lauro

Emanuele Lauro

Chief Executive Officer (Principal Executive Officer)

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Brian Lee, certify that:

1. I have reviewed this annual report on Form 20-F of Scorpio Tankers Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 23, 2012

/s/ Brian Lee

Brian Lee

Chief Financial Officer (Principal Financial Officer)

EX-13.1

Exhibit 13.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Scorpio Tankers Inc. (the “Company”) on Form 20-F for the year ended December 31, 2011 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Emanuele Lauro, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: March 23, 2012

/s/ Emanuele Lauro

Emanuele Lauro

Chief Executive Officer (Principal Executive Officer)

EX-13.2

Exhibit 13.2

PRINCIPAL FINCNIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Scorpio Tankers Inc. (the “Company”) on Form 20-F for the year ended December 31, 2011 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Brian Lee, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: March 23, 2012

/s/ Brian Lee

 Brian Lee

 Chief Financial Officer (Principal Financial Officer)

EX-15.1

 Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement on Form 20-F (Registration Nos. 333-164940) of Scorpio Tankers Inc. of our report dated March 23, 2012 relating to the consolidated financial statements and effectiveness of internal control over financial reporting of Scorpio Tankers Inc, which appear in this Annual Report on Form 20-F for the year ended December 31, 2011.

/s/ Deloitte LLP

London, United Kingdom

Date: March 23, 2012